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Dive Brief:
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Constellation Brands last week said it would divest Woodbridge, Meiomi and several other of its struggling lower-priced wines to The Wine Group for an undisclosed amount to focus on premium brands in the category. The company expects to save more than $200 million annually by 2028 because of the sale.
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Constellation expects some of its remaining wine brands to be impacted by Trump’s tariffs on imported foreign goods and ensuing boycotts of American products, according to an investor note from TD Cowen analyst Robert Moskow. Sales in Canada account for roughly 20% of Constellation’s wine and spirits portfolio, Moskow estimated.
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The alcohol producer projected its wine and spirits segment could see a sales drop between 17% and 20% in its 2026 financial year. Net sales of its wine products declined 7% during its 2025 fiscal year ended Feb. 28.
Dive Insight:
As its beer portfolio is hit with tariff uncertainty and a sales slowdown linked to President Donald Trump’s immigration policies, Constellation hopes divesting some of its wine business can provide some reprieve.
Other winemakers Constellation is offloading include Simi, Cook’s and J. Rogét sparkling wine. Part of Constellation’s agreement with The Wine Group includes the sale of three facilities and more than 6,600 acres of vineyards in California.
Constellation CEO Bill Newlands said once the sale of lower-performing wine brands is completed, its niche set of premium offerings could prove financially beneficial to the company in the long run.
“Our thinking around the Wine Business relates very similar to what we've done in beer, which is this creates a Wine and Spirits Business going forward that plays at the higher end of the business,” Newlands said on the company’s earnings call last week. “We've finally gotten our portfolio sort of where we want it, so that it reflects that we're playing against that premium and up-sector across both segments of our business.”
Constellation said it is currently undergoing a review of the organizational structure of its wine business. The premium wines the company is keeping include Robert Mondavi, Kim Crawford and Ruffino.
Spiros Malandrakis, the head alcohol researcher at Euromonitor, said the move could eventually lead to Constellation selling off its entire wine portfolio. The company’s focus on niche premium wines, he said, could backfire amid a challenging economic climate.