From CNBC: 2024-12-03 11:16:26

Constellation Brands Inc. announced the sale of its Svedka vodka brand to Sazerac, a spirits company based in New Orleans. The transaction is expected to close in the coming months, though the deal value was not disclosed. Constellation CEO Bill Newlands stated the sale is part of efforts to optimize their wine and spirits portfolio for growth.

The wine and spirits business has been a drag on Constellation’s strong beer portfolio, with shipments dropping 9.8% year over year in the second quarter. Net sales and operating income for the segment fell 12% and 13%, respectively. Wine and spirits accounted for just 5% of volumes but 17% of net sales, with wine sales dominating over spirits.

Constellation acquired Svedka in 2007 for $384 million. Sazerac, the buyer, already owns popular brands like Buffalo Trace bourbon and Fireball Cinnamon Whisky. Constellation’s spirits portfolio will retain brands like High West Whiskey and Mi Campo Tequila. Investors and analysts reacted positively to the news, with Bernstein maintaining a buy-equivalent rating on the stock.

The sale of Svedka is seen as a positive move for Constellation’s growth prospects, signaling a willingness to make tough decisions to evolve the business. The company will share more details about the transaction at the Morgan Stanley Global Consumer and Retail Conference on Dec. 3.



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