Over the past century, countless companies have invested into — then divested out of — the famously fickle wine business. But this felt different. The multinational corporation was founded on bulk wine brands in upstate New York in 1945, and the idea of Constellation ditching all things wine after 80 consecutive years had industry analysts staring wide-eyed at the panic button.
Instead of opting out of its founding heritage entirely, though, Constellation quelled worst-case-scenario fears by offloading all its value-tier labels (Woodbridge, Meiomi, Robert Mondavi Private Selection, Cook’s, SIMI, and J. Rogét) to mass-market repository The Wine Group — keeping focus on a core cadre of premium-plus to prestige brands.
Constellation has been Modelo–fueled via an antitrust windfall for some time now, so a strategic partial divestment of some sort didn’t come as too jarring a maneuver. It’s a scenario unfolding repeatedly as of late among industry heavyweights, with the likes of the Duckhorn Portfolio, Chateau Ste. Michelle, and Treasury Wine Estates all purging peripheral brands (or attempting to) in an effort to protect essential assets.
“It’s not unexpected that we’re undergoing a period of change, and that different companies are responding in different ways,” says Robert Hanson, CEO of the Duckhorn Portfolio. “As a wine company that has focused exclusively on the $20-plus category for almost half a century, focusing on the luxury segment is not new.”
It’s one thing for Duckhorn — a perennial premium-and-up specialist — to shed some weight and focus on its prestige icons in leaner times. But the specifically targeted unloading of value brands from formerly diversified companies confirms a pattern playing out across the global winescape: A grand realignment of value-segment priorities is in the works.
It’s entirely possible this is just a somewhat similar consequence to bust cycles past. But if a more starkly foundational value-wine realignment is underway, it could hint at future systemic deterioration of industry health.
Wine’s love/hate relationship
The wine industry has always had two distinct personalities — an odd couple intermeshed in a complicated and occasionally combative marriage. As Hanson pointed out, it’s unsurprising that there should be some reevaluation of the relationship from time to time.
“Fine wine is a more artisanal pursuit centered on expressing terroir, honoring heritage, and crafting something truly authentic,” says Fernando da Cunha Guedes, president of Portugal’s Sogrape, the country’s largest wine company. “Fine wine is born in the vineyard and brought to the market as a creation of the winemaker.” He contrasts that with value-driven wines designed for consistency and scale, with cost control and supply chain efficiency essential to success. “[They] have many similarities to FMCG and are built from the consumer back,” he adds. “These are fundamentally different ecosystems.”
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