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Two US Biggies Divesting Wine Portfolios

Posted: Wednesday, 22 December 2010 11:53

Two US Biggies Divesting Wine Portfolios

Global meltdown with a glut of wine and pressure on prices has made two of the big US-based corporations decide to divest their wine portfolios, with Constellation Brands planning to get rid bulk of its non US wineries and Brown-Forman Corp placing the wine business for sales, putting a question mark on the marketing plans of some of the products selling in India, writes our California Correspondent, Rishi Vohra CSW .

After going on a two-decade acquisition spree including the mega Robert Mondavi Corporation for over a billion dollars in 2004, the world’s biggest wine company is back-tracking with non-US wineries on the block, two years after it started restructuring by selling three of its wineries and 30% of its product lines.

According to a report in the Wall Street Journal, the business is proposed to be sold to hitherto unknown private equity investors or other global wine and spirits companies who are expected to shell out between $300-400 million for the bulk of its non-domestic businesses, with brands including Ruffino from Italy, Kim Crawford from New Zealand and Hardys from Australia. Its US brands include Robert Mondavi, Ravenswood in Sonoma, Inniskillin ice wines and the modest priced Clos du Bois and Blackstone.

Incidentally, Ruffino and Hardys are being sold in India by Sula Vineyards which also sells Rémy Martin’s Piper-Heidsieck Champagne- the unit that is already on the block.

Kentucky-based Brown-Forman Corp is known for its Jack Daniel's whiskey and Finlandia vodka , made popular in India by its India Head- Amrit Kiran Singh, but their entry-level Fetzer (around $7 retail in the US) has been in the Indian market for a few years, along with Korbel California Champagne.

Reports indicate that the company has hired Rothschild to run the auction process after living with sluggish sales in recent times. The wine division sales came down from $360m last year to $310m this year- ending April. The revenues from wine sales are rather small, less than 10% of the total sales of $3.2 billion.

Constellation Brands, on the other hand, is primarily a wine company with 90% of its business coming from selling low-priced wines like Clos du Bois and Blackstone. It has been squeezed between a wine glut in Australia and the falling prices of wines in the UK.

It had already sold its Italian wine brands business, Bolla and Fontana Candida two years ago. It has shifted its focus to premium brands of wines.

Both companies have reportedly refused to confirm the reports.



VitaBellaWine Says:

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Posted @ December 23, 2010 17:50


Tarun Says:

India offers great prospects for wine business. Where the growth in world wine industry is slowing down, wine industry in India is growing at a rate of 25% to 30% every year. Refer to the following report to get a comprehensive understanding of the wine business in India.

Posted @ December 22, 2010 17:20


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