Constellation Splits into Three Businesses
Constellation announced its new organizational structure today after acquiring Fortune’s wine portfolio in December. Under the new structure, Constellation Wines U.S. will have three business units – Vintas, Icon Estates and Centerra Wine Company.
VINTAS. Vintas is a new business unit that will focus primarily on premium and super premium wine. Its brands will include Clos du Bois, Woodbridge, Robert Mondavi Private Selection, Blackstone and Ravenswood. Chris Fehrnstrom has been appointed president of Vintas, from his current role as president of Icon Estates. Vintas will be headquartered in San Francisco.
Cellar Door, the division for emerging brands which currently falls under Pacific Wine Partners, will become a division of Vintas. It will include such brands as Hayman & Hill, Red Guitar, Barossa Valley Estate, Leasingham and Diseno.
In addition, Vintas will have a division known as BWE, which will handle Geyser Peak, Buena Vista, Gary Farrell and other selected brands from the Beam Wine Estates acquisition.
ICON ESTATES. Icon Estates will continue to focus on its ultra-premium and luxury brands portfolio such as Robert Mondavi Winery, Simi, Estancia, Franciscan, Kim Crawford, Ruffino and now Wild Horse. The Icon Estates offices will remain in their current location in St. Helena, CA. Eric Morham has been appointed president of Icon Estates from his position as senior vice president, international. Ben Dollard, currently the president of Pacific Wine Partners, will assume the position of senior vice president, international.
CENTERRA WINE CO. Under the new structure, Centerra will focus on specialty, fighting varietal and value brands, as well as imported wines. Its brands will include Arbor Mist, Cook's, Paul Masson Grande Amber Brandy, Richard's Wild Irish Rose, Vendange, Banrock Station, and Inglenook. Tim Richenberg has been appointed president of Centerra from his current role as president of North Lake Wines. Centerra Wine Company will be based in Canandaigua, NY.
WALL STREET ON CONSTELLATION
Analysts had mixed commentary on Constellation’s third quarter, announced yesterday. It was an overall good quarter, but uncertainties are looming and that makes some analysts a little nervous.
Kaumil Gajrawala of UBS believes economic downturns in the U.S. and an overly competitive UK retail environment could hurt STZ.
“US wine growth was strong in 3Q, a trend we believe continues, but at a slower pace in C2008. We expect Clos du Bois to be the main catalyst behind STZ’s branded wine growth in C2008. Svedka results were also encouraging and we believe ultra premium wine and spirits will continue to do well in 08,” he said.
“Despite these solid results, we remain Neutral on STZ shares. STZs spirits portfolio has significant exposure to the value segment, which we feel would be impacted negatively during an economic slowdown. We also continue to be concerned with the UK retail environment as 3Q results did little to alleviate our concerns that market conditions continue to be challenging. We also don’t believe tighter harvests in Australia or California will have any near-term impact on prices.”
Tim Ramey of D.A. Davidson had a slightly different story, believing good times are ahead. He rated STZ shares BUY with a price target of $32.
“The inventory draw-down is behind us, the EU has implemented beneficial policies, and the forecasts call for another weak harvest out of Australia-this should be very important for the shares,” he said.
“We continue to view the wine category, in the context of a relatively sluggish consumer outlook, as one of the best performing categories. STZ is the best way to play the growth in the premium varietal wine category.”
EU REGULATORS COULD BLOCK DIAGEO’S ABSOLUT BID
Diageo believes its biggest challenge to its bid for Absolut is from antitrust regulators in Europe. CFO Nick Rose said at a press conference that Diageo would face challenges in two or three markets in continental Europe, where Absolut and Smirnoff both have high market shares. Rose did not specify the markets.
"We do see ways we could own the brand, making some assumptions on how regulators work," Rose told a briefing on Tuesday, according to a report in Reutuers.
The U.S. is apparently not as big of a problem because regulators tend to segment on price and there is around a $5 a bottle difference between the two brands. European regulators look more at overall national market shares.
Diageo has commented time and time again that Absolut is not a “must have” deal and that it will not abandon its “strict financial discipline” for the Swedish vodka.
OUTLOOK. In other Diageo news, Nick Rose said the company is sticking by its forecast of 9% growth in operating profit for the current financial year. He acknowledged, however, that the target was "probably feeling a little more stretching" amid tougher business conditions and a slowing rate of spirits growth in the U.S., according to the AP.
Expect prices to go up as Diageo deals with rising costs for raw materials. "Pricing is a lever you will see more in play in the company this year," he said.
The premium market in North America is “holding up and will continue to hold up.”
WSD BRIEFS:
J. WRAY & NEPHEW (owned by Lascelles deMercado) ended its marketing agreement with Brown-Forman in the U.S. as we reported earlier this week. Although the company claims the move does not signal any intentions to consolidate with Angostura, we think it’s just a matter of time before it’s bought out by the Caribbean company.
WHITE ROCKET WINE CO. (owned by Kendall Jackson) has created Horse Play Rollicking Red, a blend of Cabernet Sauvignon, Merlot and Syrah. It launches in January, 2008 with a suggested California retail price of $11.99 per 750 ml bottle.
HEAVEN HILL has added a strawberry flavor extension to its Burnett’s Vodka line.
Until tomorrow, Megan
“Work is the curse of the drinking classes.”
Oscar Wilde
--------- Sell Day Calendar ----------
Today's Sell Day: 6
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Wed.
YTD sell days Over/Under: 0
VINTAS. Vintas is a new business unit that will focus primarily on premium and super premium wine. Its brands will include Clos du Bois, Woodbridge, Robert Mondavi Private Selection, Blackstone and Ravenswood. Chris Fehrnstrom has been appointed president of Vintas, from his current role as president of Icon Estates. Vintas will be headquartered in San Francisco.
Cellar Door, the division for emerging brands which currently falls under Pacific Wine Partners, will become a division of Vintas. It will include such brands as Hayman & Hill, Red Guitar, Barossa Valley Estate, Leasingham and Diseno.
In addition, Vintas will have a division known as BWE, which will handle Geyser Peak, Buena Vista, Gary Farrell and other selected brands from the Beam Wine Estates acquisition.
ICON ESTATES. Icon Estates will continue to focus on its ultra-premium and luxury brands portfolio such as Robert Mondavi Winery, Simi, Estancia, Franciscan, Kim Crawford, Ruffino and now Wild Horse. The Icon Estates offices will remain in their current location in St. Helena, CA. Eric Morham has been appointed president of Icon Estates from his position as senior vice president, international. Ben Dollard, currently the president of Pacific Wine Partners, will assume the position of senior vice president, international.
CENTERRA WINE CO. Under the new structure, Centerra will focus on specialty, fighting varietal and value brands, as well as imported wines. Its brands will include Arbor Mist, Cook's, Paul Masson Grande Amber Brandy, Richard's Wild Irish Rose, Vendange, Banrock Station, and Inglenook. Tim Richenberg has been appointed president of Centerra from his current role as president of North Lake Wines. Centerra Wine Company will be based in Canandaigua, NY.
WALL STREET ON CONSTELLATION
Analysts had mixed commentary on Constellation’s third quarter, announced yesterday. It was an overall good quarter, but uncertainties are looming and that makes some analysts a little nervous.
Kaumil Gajrawala of UBS believes economic downturns in the U.S. and an overly competitive UK retail environment could hurt STZ.
“US wine growth was strong in 3Q, a trend we believe continues, but at a slower pace in C2008. We expect Clos du Bois to be the main catalyst behind STZ’s branded wine growth in C2008. Svedka results were also encouraging and we believe ultra premium wine and spirits will continue to do well in 08,” he said.
“Despite these solid results, we remain Neutral on STZ shares. STZs spirits portfolio has significant exposure to the value segment, which we feel would be impacted negatively during an economic slowdown. We also continue to be concerned with the UK retail environment as 3Q results did little to alleviate our concerns that market conditions continue to be challenging. We also don’t believe tighter harvests in Australia or California will have any near-term impact on prices.”
Tim Ramey of D.A. Davidson had a slightly different story, believing good times are ahead. He rated STZ shares BUY with a price target of $32.
“The inventory draw-down is behind us, the EU has implemented beneficial policies, and the forecasts call for another weak harvest out of Australia-this should be very important for the shares,” he said.
“We continue to view the wine category, in the context of a relatively sluggish consumer outlook, as one of the best performing categories. STZ is the best way to play the growth in the premium varietal wine category.”
EU REGULATORS COULD BLOCK DIAGEO’S ABSOLUT BID
Diageo believes its biggest challenge to its bid for Absolut is from antitrust regulators in Europe. CFO Nick Rose said at a press conference that Diageo would face challenges in two or three markets in continental Europe, where Absolut and Smirnoff both have high market shares. Rose did not specify the markets.
"We do see ways we could own the brand, making some assumptions on how regulators work," Rose told a briefing on Tuesday, according to a report in Reutuers.
The U.S. is apparently not as big of a problem because regulators tend to segment on price and there is around a $5 a bottle difference between the two brands. European regulators look more at overall national market shares.
Diageo has commented time and time again that Absolut is not a “must have” deal and that it will not abandon its “strict financial discipline” for the Swedish vodka.
OUTLOOK. In other Diageo news, Nick Rose said the company is sticking by its forecast of 9% growth in operating profit for the current financial year. He acknowledged, however, that the target was "probably feeling a little more stretching" amid tougher business conditions and a slowing rate of spirits growth in the U.S., according to the AP.
Expect prices to go up as Diageo deals with rising costs for raw materials. "Pricing is a lever you will see more in play in the company this year," he said.
The premium market in North America is “holding up and will continue to hold up.”
WSD BRIEFS:
J. WRAY & NEPHEW (owned by Lascelles deMercado) ended its marketing agreement with Brown-Forman in the U.S. as we reported earlier this week. Although the company claims the move does not signal any intentions to consolidate with Angostura, we think it’s just a matter of time before it’s bought out by the Caribbean company.
WHITE ROCKET WINE CO. (owned by Kendall Jackson) has created Horse Play Rollicking Red, a blend of Cabernet Sauvignon, Merlot and Syrah. It launches in January, 2008 with a suggested California retail price of $11.99 per 750 ml bottle.
HEAVEN HILL has added a strawberry flavor extension to its Burnett’s Vodka line.
Until tomorrow, Megan
“Work is the curse of the drinking classes.”
Oscar Wilde
--------- Sell Day Calendar ----------
Today's Sell Day: 6
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Wed.
YTD sell days Over/Under: 0
posted at 2:28 PM
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