Constellation focuses on mid-premium spirits

Constellation Brands of Fairport, N.Y. (US$3.8 billion in 2008 revenues), a leading beer wine and spirits maker (acquired Vincor International of Mississauga in 2006), sold its value spirits business to New Orleans-based Sazerac Company for US$334 million to reduce debt and better focus on its mid-premium spirits brands including Black Velvet Canadian whisky, Svedka vodka and Paul Masson Grande Amber brandy. The sale includes distillery and bottling plants in Kentucky as well as 40 brands accounting for 600 SKUs, 10 million cases and $200 million in annual sales but not its remaining distillery in Lethbridge, Alta.

President and CEO Rob Sands explains that the retained spirits brands with five million cases in annual sales have growth potential, good margins and mid-premium price points that “represent good value” to consumers. In Ontario, for example, Black Velvet sells for  $22.65 for a 750 ml bottle, six per cent less than Canadian Club, and 15 per cent less than Crown Royal, Gibson’s Finest and Wiser’s Deluxe. Same price rivals include Carrington’s Alberta Springs, Schenley’s Golden Wedding, Corby’s Royal Reserve, Diageo’s Seagrams Five Star and Hiram Walker’s Walker’s Special Old.