Constellation Brands sells Canada arm, buys Millennial wines

Constellation Brands has sold its wine business in Canada, including award-winning Inniskillin estate, to a teachers' pension fund for one billion Canadian dollars, and will buy a collection of new wave wine brands from Washington State.

Constellation confirmed today (17 October) that it had agreed to sell its Canadian business for C$1bn (US$750,000,000) to Ontario Teachers’ Pension Plan.

The sale includes Inniskillin and Jackson-Triggs wine brands and wineries, as well as Wine Rack retail stories in Canada.

The move to sell up is part of Constellation’s plan to re-focus around premium and high end US wine brands aimed at millennials, alongside a burgeoning beer arm and small-scale spirits division.

‘We seized the opportunity to sell the entire business in a value-enhancing transaction when it presented itself,’ said Rob Sands, president and chief executive officer, Constellation Brands. The deal is still subject to regulatory approval.

It’s 10 years since Constellation expanded into Canada in a big way, buying the country’s then-biggest wine company, Vincor, in a deal worth C$1.6 billion.

Constellation, which owns Robert Mondavi, Ravenswood and Kim Crawford, made more sales from beer than from wine in the first half of its current financial year.

Separately this week, Constellation said it had also signed a deal to buy a range of five high-end wines from Charles Smith for US$120m.

It’s a purchase that has similarities to Constellation’s deal for Meiomi, a young and fast-growing wine brand that it bought in August last year.

Charles Smith is based in Washington State’s Walla Walla and its core collection of brands is only around 10 years old. Constellation has bought Kung Fu Girl Riesling, Velvet Devil Merlot, Boom Boom! Syrah, Eve Chardonnay and Chateau Smith Cabernet Sauvignon.

Constellation said these brands were in strong growth. Alongside a premium wine focus, Constellation has made little secret of its desire to reach more millennial drinkers in the US.

An industry insider also told Decanter.com earlier this year that a classic strategy for Constellation was buy promising brands and use its scale to build sales with distributors.

Charles Smith will consult to Constellation once the deal completes, expected in October.

‘Charles Smith is a visionary in the wine business and we are excited to welcome him to Constellation Brands and bring these wines to a larger audience,’ said Bill Newlands, president of wine and spirits at Constellation.