With annual wine sales exceeding US$3 billion, Constellation Brands is the world's biggest winemaker.
Constellation also imports and distributes over $1 billion worth of beer (mostly Corona) in the western U.S. Another $300 million per year is generated principally from lower-priced spirits.
Over 60 percent of sales originate in North America. Constellation is America's largest multi-category supplier of alcoholic beverages (wine, imported beer, spirits). Europe accounts for almost 30 percent of sales, while less than 10 percent of sales is derived from Australia and New Zealand.
Constellation's diverse portfolio of some 300 brands offers a wide choice of beverages, including Woodbridge premium wine, Inniskillin icewine and Black Velvet Canadian whiskey. The company concentrates on selling high-quality wines to affluent baby boomers and younger drinkers, with a focus on premium and super-premium brands like Ravenswood from California, Hardys from Australia and Monkey Bay from Australia. New World wines from these regions are among the fastest growing brands in the world today.
And The Winner Is...
Constellation's aggressive revenue growth is the result of 13 acquisitions in the past 10 years culminating with the US$1.4 billion deal for Robert Mondavi wines in 2004 and the hotly contested $1.3 billion purchase of Canada's Vincor International in June 2006.
Mondavi's luxury labels command prices upwards of $200 per bottle. As the U.K.'s largest vinter, Constellation continues to introduce Mondavi Californian wines to millions of drinkers in that region. Since Constellation owns the largest of only a handful of alcoholic beverage distributors in the U.K., the company has a strong say in determining which labels occupy shelf space in U.K. business establishments including retail stores, bars and restaurants.
The Vincor deal gives Constellation the aforementioned Inniskillin icewine, one of the world's best-known dessert wines sold in over 50 countries. Icewines from Canada's Niagara region are exceptionally sweet, picked from frozen grapes late at night which results in highly concentrated wine sugars. Constellation also gained the South African Kumala wine brand in its deal for Vincor. Kumala is one of the fastest growing New World wines because it offers affluent drinkers a distinct taste experience.
Constellation plans to expand into the formidable wine markets emerging in China and India, continuing its tradition of acquiring other alcholic beverage makers and distributors. For competitive reasons, company spokesperson Kevin Harwood would not disclose details of those expansion plans. However, a strategic world map from a presentation on Constellation's site shows that while China and India are currently viewed as second-tier markets, the American vinter has a long term strategy to branch into these vast markets once business models are finalized, acquisitions are made, and distribution wrinkles are ironed out.
When that happens, the company's audience for its highly diversified portfolio of wine, liquor and beer labels will grow even larger. So much so that an investor might consider toasting the American wine giant with modest purchases of Constellation shares (STZ on NYSE) as it continues to grow.
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Sources: www.cbrands.com
