Constellation Eyeing Exit from Wine Business
Constellation Brands Inc. (STZ) is in negotiations to sell its entire wine portfolio to two other top producers in a deal that would see the fifth largest U.S. company throw in the towel on what’s been a brutal fight for share in a decreasing wine market.
Speculation on Constellation’s possible sell off has swirled for some time given its success producing and importing Mexican lager and lackluster wine sales. WineBusiness spoke to several people with knowledge of the negotiations and potential buyers.
The purported deal would break up Constellation’s wine portfolio between Delicato Family Wines and Duckhorn, which was acquired by Butterfly Equity in December 2024. Coastal brands and assets would go to Duckhorn while Delicato would acquire Constellation’s Central Valley wine business.
According to the WineBusiness Analytics database, Constellation Wines produces nearly 15 million cases a year. The company’s largest facility, Woodbridge Winery, is in Lodi, Calif., and produces 12 million cases a year. WineBusiness Monthly estimated Constellation sold 14 million cases of wine in 2024.
In addition to Woodbridge, Constellation owns Robert Mondavi Winery, Schrader Cellars, Booker Vineyard, Sea Smoke, Lingua Franca, Simi Winery and dozens of wine brands.
Delicato was No. 4 on the WineBusiness list of the Top 50 wine companies with 16.3 million in sales volume last year and The Duckhorn Portfolio was No. 14 with an estimated 2.5 million in sales.
Constellation did not respond to a request for comment and Delicato opted to not comment. A representative for Duckhorn said the company does not comment on “market rumors or speculation.”
This past summer, the New York-based beer, wine and spirits company disclosed in an earnings call it was considering selling some of its less premium, non-core brands and vineyards to help offset deficits from overall industry downturns as well as its recent acquisition of Sea Smoke in Santa Barbara County. At the time, CEO Bill Newlands expressed a belief that the wine industry would make a turn around by the end of 2024.
That turnaround never came, however, and in the three months ended Nov. 30, 2024, Constellation reported wine sales had fallen 16.4% to 5.1 million cases, netting $431.4 million in sales, down 14% versus 2023. In the same period, beer shipments were up 1.6% to 102.7 million equivalent cases while net sales had increased 3% to $2.03 billion.
In the same earnings report, Constellation reported for the 2025 fiscal year it would be focused on its beer brands, including Corona Non-Alcoholic, Modelo Aguas Frescas, Pacifico Clara and Modelo Oro.
According to the most recent NIQ data scan, total beer sales value declined less than one percent in the 52 weeks ended Jan. 25 while sales volume declined nearly three percent. Meanwhile, wine sales value and volume fell nearly 4% and 6%, respectively.
In another sign of beer’s strength relative to wine’s weakness, Reuters reported on Feb. 14 that Warren Buffet’s Berkshire Hathaway had disclosed a $1.24 billion investment in Constellation made in the last quarter of 2024. The investment is reportedly Buffet’s first in a beverage alcohol producer and helped lift Constellation’s stock price by nearly 7% although it remains more than 20% less than it was a year ago according to the WineBusiness Stock Index.
News of Buffet’s investment came at the same time Treasury Wine Estates announced it had been unable to sell its commercial wine division last year. The Australian firm is No. 6 on the Top 50 list and had announced its intent to offload lower-priced wines in August but was unable to find a buyer.