Constellation Brands (CB) is going to discontinue up to 40 percent of its underperforming wine and spirits brands according to a report by the wine enthusiast. “We are in the process of optimizing the wine and spirits business with mid-single-digit growth rates and 30%-plus operating margins,” said Bill Newlands, President and COO of the company who will succeed the founder’s son Rob Sands as CEO on March 1, 2019 (inside.beer, 19.10.2018).
In its aim to improve margins the Fortune 500 company wants to continue only the so-called ‘power brands’ which sell for more than US$11 per bottle at retail. “Everything that is not a ‘power brand,’ you can assume that we’re either going to sell it, discontinue it, or milk it very quickly over the next year or so,” said David Klein, CB’s CFO.
Up to date the company has more than 100 brands in its portfolio, about 40 wineries, breweries and distilleries, and employs approximately 10,000 employees.
The move follows the change of strategy of the company over the years. CB started in 1945 as Canandaigua Industries by selling cheap bulk wine to bottlers in the eastern United States. Over the years, Constellation Brands (as it was named in 2000 to reflect the extended scope of the company and its range of brands) went into retail business and was able to acquire dozens of wine and spirits brands and companies. In 2013 CB bought GrupoModelo's U.S. beer business from AB InBev, following a request by US antitrust authorities after AB InBev’s purchase of the remaining 50% stake in Mexican brewer Modelo in 2012. The deal, worth US$5.3 billion included Grupo Modelo’s U.S. distribution rights for Corona and other Mexican beer brands as well as the brewery Compañía Cervecera de Coahuila in Piedras Negras/Nava in Mexico, which is said to be the largest brewing site in the world. In addition CB bought in 2016 for US$600 million Grupo Modelo’s brewery in Obregón/Mexico, where the company produces large amounts of CB’s U.S. beer (inside.beer, 1.11.2016).
Currently CB’s wine portfolio includes brands like Kim Crawford, Meiomi, Cooper & Thief, The Prisoner Company, Nobilo, Charles Smith Wines, Ravage, 7 Moons, Robert Mondavi Winery, The Dreaming Tree, Mount Vedeer, Arbor Mist, Black Box Wines, Clos du Bois, Cook’s Champagne, Estancia, Franciscan Estate, Mark West, Ravens Wood, Robert Mondavi Private Selection, Ruffino, Saved, Schrader, Simi, Spoken Barrel, The Snitch, Tom Gore, Wild Horse and Woodbridge. Spirits include Black Box Spirits, Casa Noble Tequila, Svedka Vodka, High West Distillery, Black Velvet Whisky and Paul Masson Grande Amber Whisky.