Dec 13, 2019

Constellation Brands revises deal with Gallo Winery

 Cases of Modelo and Pacifico beer

Modelo and Pacifico beer are a part of Constellation Brands. Photo: Justin Sullivan/Getty Images

Constellation Brands revised what had been a $1.7 billion deal to sell a portfolio of low-priced wine and spirits brands to E. & J. Gallo Winery, in order to satisfy Federal Trade Commission concerns.

The state of play: The deal value is now around $600 million lower, with Constellation retaining some of the brands, including Cook's California Champagne and J. Roget American Champagne.

Why it matters: Had the original deal gone through, estimates are that Gallo would have controlled up to 80% of America's discount sparkling wine market and almost its entire wine concentrate market.

  • More: In a separate transaction, Constellation will sell New Zealand-based Nobilo Wine brand and related assets to Gallo for $130 million.
  • The bottom line: "The proposed smaller sale would still rank as a tremendous moment within the U.S. wine sector, as Gallo would grow even bigger as the top U.S. producer and No. 3 Constellation would shrink to focus on its more profitable premium wine market. Gallo has 23% of the domestic wine market, while Constellation has 11%." — Bill Swindell, The Press-Democrat

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