Constellation Brands has continued its strategy of divesting non-core assets, offloading several wine brands to U.S.-based peer The Wine Group. The sale, announced on April 9, includes prominent names such as Woodbridge, Meiomi, and Cook’s, all of which are largely positioned in the declining mainstream segment of the wine market. The transaction is expected to generate approximately $900 million in proceeds during Constellation’s upcoming fiscal year.
This move is part of Constellation’s ongoing efforts to streamline its portfolio by focusing on higher-end products. The company’s strategy to pivot toward premium and craft spirits follows a similar transaction in 2022, when it sold brands like Cooper & Thief and The Dreaming Tree to The Wine Group.
Bill Newlands, President and CEO of Constellation Brands, commented on the sale, stating that it aligns with the company’s long-term business strategy. “This transaction reflects our multi-year strategy to reconfigure our business, resulting in a portfolio of higher-end wine and craft spirits brands that are aligned with evolving consumer preferences and help strengthen our competitive position,” he explained.
Analyst Nadine Sarwat of Bernstein expressed that investors are likely to view this move positively, noting that a divestment of Constellation’s wine business had long been anticipated. “A divestment of the wine business, or a portion of it, has been desired by investors for a long time, and this news should be taken positively,” Sarwat stated.
The sale also includes three facilities and 6,600 vineyards, which are either leased or owned in California, further expanding The Wine Group’s footprint. In a statement, The Wine Group highlighted that the acquisition will strengthen its portfolio with several popular premium and ultra-premium brands, enhance its retail presence, and improve operational capabilities.
John Sutton, CEO of The Wine Group, remarked, “The addition of these assets will build on our commitment to being a consumer-led company, delivering a diversified portfolio that offers exceptional taste, quality, and value for any occasion.”
Alongside the announcement of the sale, Constellation Brands revealed its financial results for the fiscal year 2024/25, which ended in February. The company reported net sales growth of 2%, reaching $10.21 billion, but a sharp 89% decline in operating income to $355 million, resulting in a net loss of $81 million. The decline in operating income was attributed to impairment and restructuring costs.
However, on a comparable basis, Constellation posted a 2% increase in revenue, a 7% rise in operating income to $3.48 billion, and a 10% increase in net income to $2.51 billion. The company also issued guidance for the 2025/26 fiscal year, forecasting flat to slightly declining net sales.
Looking ahead, Constellation expects net sales from its beer business to be flat or up by 3%, while its wines and spirits division is projected to experience an organic sales decline of 17-20%. The company anticipates comparable operating income to decrease by 1-3%.
For the longer-term, Constellation has forecasted annual net sales growth of 2-4% in the 2027 and 2028 fiscal years, with beer sales expected to rise in line with this projection. The company’s wines and spirits division is expected to see more modest growth, with sales expected to be flat to up by 3% annually.
As part of its restructuring efforts, Constellation also plans to implement enterprise-wide actions that are expected to deliver net annualized cost savings of over $200 million by FY28. Analyst Sarwat commented on the company’s guidance, noting the clear negative impact of reduced beer growth projections for 2026, but praised management for providing a detailed outlook despite current macroeconomic pressures.
You Might Be Interested In:
