Constellation Sells 30 Alcohol Brands For $1.7B, Looks At Cannabis Beer

Constellation Brands Inc., the world’s largest beer supplier with over 100 beer, spirit and wine brands, plans to sell about 30 of its low-end wine and spirits brands to E. & J. Gallo Winery for $1.7 billion.

Its beer portfolio includes imported brands such as Corona, Modelo Especial, Ballast Point, and Funky Buddha. On the othe hand, Gallo is the largest exporter of California wines and is based in Modesto.

Constellation Brands is divesting to focus on more profitable brands. The deal involves getting rid of Constellation’s products priced at or below $11 a bottle. These include Clos du Bois, Ravenswood and Mark West and the related facilities. The company expects the deal to close at the end of the first quarter of fiscal 2020.

In February, the company said it intended to sell some of its low-end wine brands to invest more resources in more profitable high-end segment.

"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," said Bill Newlands, CEO and president of Constellation Brands, in an indirect reference to cannabis.

The company also wanted to shift more towards beer and cannabis products that target a younger Millennial demographic. Speculation abounds Constellation Brands will soon launch its own cannabis-infused beer brand.

In August 2018, Constellation Brands invested $3.8 billion in Canadian cannabis firm Canopy Growth Corporation. The investment saw Canopy Growth’s stocks surge by a massive 30 percent at the time.

This buy-in by Constellation Brands means the New York-based firm now owns a 38 percent share in Canopy Growth compared to its previous 10 percent. A Fortune 500 company, Constellation Brands is the largest beer import company in the world in terms of sales.

Canopy Growth is the first federally regulated, publicly traded cannabis producer in Canada and the United States. It’s the largest producer of medical cannabis in North America.