Constellation Brands says it has signed an agreement with E. & J. Gallo Winery to divest about 30 brands from Constellation’s wine and spirits portfolio.
The deal will see the Victor-based company selling the brands for $1.7 billion. It generally involves wine and spirits brands priced at $11 and below as well as related facilities in California, New York and Washington.
Those facilities being sold to California-based Gallo include the Canandaigua Winery and a distribution facility, also based in Canandaigua.
Constellation Brands President and CEO Bill Newlands says that, “One of the hallmarks of our success over the years has been our ability to evolve and stay on the forefront of emerging consumer trends. This decision will help enhance organizational focus on a more premium set of wine and spirits brands that better position our company to drive accelerated growth and shareholder value.“
Senior Vice President for Corporate Communications at Constellation Brands, Mike McGrew, said that Gallo “has a tremendous amount of respect for the brands they are acquiring and the operating facilities and people behind them.”
He said that Gallo is better positioned to give these brands and facilities, “the focus, resources and investment they need.”
The facilities that Gallo will acquire include the Canandaigua Winery and Constellation's East Coast Distribution Center, which is located about a half-mile away from the winery on Buffalo Street in Canandaigua. A total of just over 200 people work at both operations, and they will eventually be working for Gallo.
McGrew says Gallo sees "these facilities and associated employees as strategic assets that can help support their objective to offer consumers quality products at every price point."
McGrew also said that while Constellation Brands can’t speak for Gallo, Constellation believes this deal best serves both the long-term interests of its business, as well as the facilities that are being transitioned and the associated employees.
More details are expected when Constellation Brands releases results for its fourth quarter and fiscal year on Thursday morning.
