Constellation Brands, a major player in the U.S. alcoholic beverage industry, owns over 100 brands, including well-known names such as Robert Mondavi, Kim Crawford, Ruffino, Meiomi, Simi Winery, and The Prisoner. Despite its significant presence in the wine sector, the company has faced difficulties in recent years.
Wine sales dropped by 14% year-on-year in the three months ending November 2024, while spirits sales also declined by 15%. These struggles have prompted the company to reconsider its position in the wine industry.
Constellation Brands Shifts Focus, Plans to Exit Struggling Wine Business for Growth
Amid ongoing struggles, Constellation Brands is reportedly preparing to exit the wine business. According to Wine Business, the company is looking to offload its Central Valley wine operations to Delicato Family Wines, a company known for brands like Francis Coppola, 1924, and Stoneleigh.
Additionally, its coastal brands and vineyards are expected to be sold to The Duckhorn Portfolio, which was recently acquired by the private equity firm Butterfly Equity. This move marks a significant shift in Constellation’s strategy as it pivots away from wine in favor of its more profitable ventures.
Constellation Brands to Exit Wine Business, Shifting Focus to Booming Beer MarketFounded in 1945 in New York’s Finger Lakes region, Constellation Brands initially gained recognition for selling Richard’s Wild Irish Rose, a fortified wine. Over time, it expanded its portfolio by acquiring several key wine brands, establishing itself as a major force in the wine industry.
However, its biggest transformation came in 2013 when it entered the beer market in a major way. The company acquired Grupo Modelo’s U.S. operations, including the Piedras Negras brewery and the Crown Imports distribution network, after AB InBev was forced to divest the business due to antitrust concerns.
Constellation Thrives in Beer Market but Struggles with Declining Wine and Spirits Sales
The acquisition of Modelo’s U.S. operations proved to be a game-changer for Constellation. Brands like Modelo and Corona have since seen massive success, with Modelo even becoming the top-selling beer in the U.S. This shift in focus allowed Constellation to strengthen its position in the beer market, ultimately making it a dominant force in the industry.
However, while its beer segment has thrived, the wine and spirits division has struggled to maintain profitability, leading to financial setbacks for the company.
The decline in U.S. wine sales, which fell by 6% in 2024, according to SipSource data, has been attributed to changing demographics, economic factors, and increasing health consciousness among consumers.
In response, Constellation issued a profit warning in September, citing an expected impairment of up to $2.5 billion in its wine and spirits division. Faced with mounting challenges, the company appears to have decided that exiting the wine business is the best course of action, allowing it to focus on its thriving beer segment instead.
