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News Alert: Gallo Reportedly In Talks To Acquire Lower-End Constellation Wine Brands

March 15, 2019

E.&J. Gallo is in advanced talks to acquire a number of lower-priced wine brands from Constellation Brands, CNBC reports, citing people familiar with the situation.

Brands including Clos du Bois, Mark West, and Arbor Mist were put up for sale last year as Constellation looks to exit the below-$11 wine business.

While initial reports valued the brands at $3 billion, CNBC reports that the sale could now fetch below $2 billion, adding that the exact brands included in the deal are still under debate between the two parties.

In a recent interview with SND, incoming Constellation CEO Bill Newlands noted, “In wine and spirits, the premiumization trend is critical. In wine, our entire focus is on the $11-and-up segment, where the significant growth is. All of our recent acquisitions and innovations are centered on premiumizing and upweighting our portfolio at the higher end of the price ladder.”

Divesting these below-$15 brands—which could total about 7.5 million cases—could mark a significant step in that premiumization process. Meanwhile, Newlands said that continuing to grow more recent high-end acquisitions like Meiomi, Schrader, and The Prisoner will be at the top of Constellation’s agenda in wine.—Daniel Marsteller

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