Alert: Constellation Sells Value Spirits Brands
It was announced this morning that Constellation will sell its value spirits business for $334 million to New Orleans-based Sazerac Company. This is clearly a huge step for Sazerac, who is gaining 40 brands including Barton, Skol, Mr. Boston, Fleischmann's, the 99 schnapps line, the diAmore line, Chi-Chi's pre-mixed cocktail line, Montezuma Tequila, in addition to numerous other brands representing over 600 SKUs. The total volume added up to 10 million cases in fiscal year 2008, with net sales totaling approximately $200 million. Distillery and bottling facilities included in the sale are located at Bardstown and Owensboro, Ky., as well as a leased bottling facility at Carson, Calif.
The transaction is expected to close by the end of February 2009. All the after-tax proceeds (about $210) will be used to pay off Constellation’s debt. Constellation is keeping its premium and mid-premium brands, including Svedka, Black Velvet and Paul Masson Grande Amber Brandy. According to the company, Svedka is the fourth largest imported vodka brand in the U.S., while the other two brands are each number two by volume in their respective categories. These three brands total almost 5 million cases. Constellation will also retain its distillery and production facility at Lethbridge, Alberta, Canada.
Selling its value spirits brands is another step by Constellation to focus on building its premium business. It does seem curious that it would sell the portfolio during the current economic situation, particularly since value brands are seeing a resurgence in growth, but Constellation also has a significant amount of debt to pay off. The next question, of course, is whether Constellation will make any acquisitions in the near future. Rob Sands said last week that the company is not looking at anything specific, but perhaps Constellation will consider purchasing a more popular spirits brand in the near future. There is also speculation over where Ste. Michelle could end up and if any companies will make a bid on Foster’s wine business or its brands (assuming they’re for sale). On another note, it’s unclear how this will affect distribution. It could signal a switch to RNDC.
Until later, Megan
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
The transaction is expected to close by the end of February 2009. All the after-tax proceeds (about $210) will be used to pay off Constellation’s debt. Constellation is keeping its premium and mid-premium brands, including Svedka, Black Velvet and Paul Masson Grande Amber Brandy. According to the company, Svedka is the fourth largest imported vodka brand in the U.S., while the other two brands are each number two by volume in their respective categories. These three brands total almost 5 million cases. Constellation will also retain its distillery and production facility at Lethbridge, Alberta, Canada.
Selling its value spirits brands is another step by Constellation to focus on building its premium business. It does seem curious that it would sell the portfolio during the current economic situation, particularly since value brands are seeing a resurgence in growth, but Constellation also has a significant amount of debt to pay off. The next question, of course, is whether Constellation will make any acquisitions in the near future. Rob Sands said last week that the company is not looking at anything specific, but perhaps Constellation will consider purchasing a more popular spirits brand in the near future. There is also speculation over where Ste. Michelle could end up and if any companies will make a bid on Foster’s wine business or its brands (assuming they’re for sale). On another note, it’s unclear how this will affect distribution. It could signal a switch to RNDC.
Until later, Megan
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 7:03 AM
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