Constellation Brands Inc., the fifth-largest wine company in the U.S., is reportedly in negotiations to sell its entire wine portfolio to two major producers—Delicato Family Wines and Duckhorn.
This potential divestment signals a major shift for Constellation, which has struggled to maintain its foothold in a shrinking wine market while experiencing greater success with its Mexican lager business.
A Long-Anticipated Move
Speculation about Constellation’s exit from the wine sector has been ongoing, particularly in light of its declining wine sales. The company, which owns well-known brands like Robert Mondavi Winery, Schrader Cellars, Woodbridge, and Sea Smoke, has faced challenges in competing with premium and value-driven wineries. WineBusiness reports that Constellation is in advanced discussions to divide its wine assets between Delicato and Duckhorn, with the latter acquiring coastal brands and assets, while Delicato would take over Constellation’s Central Valley operations.
A Market in Decline
According to WineBusiness Analytics, Constellation produces nearly 15 million cases of wine annually, with its largest facility, Woodbridge Winery in Lodi, California, accounting for 12 million cases alone. However, the company reported a 16.4% drop in wine sales in the three months ending November 30, 2024, bringing net wine revenue down 14% to $431.4 million. In contrast, beer sales increased 3% to $2.03 billion in the same period.
These figures reflect the overall downturn in the wine industry. The latest NIQ data scan shows wine sales volume fell 6% in the 52 weeks ending January 25, 2025, while beer sales volume declined by a smaller margin of 3%.
Shifting Focus to Beer
Despite its struggles in the wine market, Constellation’s beer business remains strong. The company has seen sustained growth in key brands such as Corona Non-Alcoholic, Modelo Aguas Frescas, Pacifico Clara, and Modelo Oro. With beer sales outperforming wine, Constellation has prioritized expanding its beer portfolio, reducing its exposure to the declining wine sector.
Further bolstering Constellation’s position, Warren Buffett’s Berkshire Hathaway disclosed a USD 1.24 billion investment in the company in Q4 2024, marking Buffett’s first-ever venture into the alcoholic beverage market. This news boosted Constellation’s stock by nearly 7%, though its share price remains more than 20% lower than a year ago, according to the WineBusiness Stock Index.
Industry-Wide Struggles
Constellation’s strategic shift aligns with broader challenges in the global wine industry. Treasury Wine Estates, another major player, failed to find a buyer for its commercial wine division in 2024, despite announcing plans to divest its lower-priced wines. Meanwhile, the trend of declining wine consumption in key markets, coupled with rising competition from spirits and non-alcoholic alternatives, continues to pressure large wine producers.
If Constellation successfully exits the wine business, it would mark a significant moment in the industry, as one of the largest players pivots away from wine to focus on the more profitable beer market. The move could reshape competition in the U.S. wine sector, strengthening Delicato and Duckhorn while leaving room for other producers to fill the void left by Constellation’s departure.
Source: Wine Business