Constellation Brands may sell entire wine portfolio amid declining sales

Constellation Brands is reportedly considering selling its entire wine portfolio due to declining sales. The New York-based company, which owns over 100 brands like Robert Mondavi and Kim Crawford, has faced challenges in its wine segment. In the three months ending November 2024, wine sales dropped by 14%, while spirits sales decreased by 15%. This has led the company to contemplate exiting the wine industry, as reported by Wine Business.

The company's Central Valley wine operations might be sold to Delicato Family Wines, known for brands like Francis Coppola. Meanwhile, its coastal brands and vineyards could be acquired by The Duckhorn Portfolio, which was recently bought by private equity firm Butterfly Equity. Constellation Brands, founded in New York's Finger Lakes region in 1945, initially gained fame with Richard’s Wild Irish Rose, a fortified wine. Over time, it expanded through acquisitions to become a significant wine producer.

A pivotal moment for Constellation came in 2013 when it acquired Grupo Modelo’s US operations, including the Piedras Negras brewery and Crown Imports, after AB InBev's purchase of Grupo Modelo faced antitrust issues. This acquisition propelled Constellation into a leading position in the US beer market, with Modelo and Corona becoming top brands. Despite success in beer, the wine and spirits division has been a burden.

In September, Constellation issued a profit warning, anticipating an impairment of up to $2.5 billion on its wine and spirits unit. Total US wine sales fell by 6% in 2024, according to SipSource data, with shifting demographics, economic factors, and health concerns cited as reasons. Constellation is reportedly considering a complete exit from the wine business, marking a significant shift in its strategy.