Constellation Brands Sells Lower-Priced Wine Labels Amid Strategic Shift and Restructuring

Edited by: TJVNews.com

Facing evolving consumer preferences and slowing growth in its flagship beer division, Constellation Brands Inc. is undertaking a sweeping corporate realignment, including the sale of several of its most recognizable lower-priced wine brands. According to a report that appeared on Wednesday in The Wall Street Journal, the move signals a deeper pivot toward premiumization and cost efficiency as the alcohol giant braces for more modest growth prospects across its portfolio.

On Wednesday, the maker of Modelo beers and Kim Crawford wines announced it has signed an agreement to offload a significant portion of its wine assets — including well-known names such as Woodbridge, Robert Mondavi Private Selection, Meiomi, SIMI, and J. Rogét sparkling wine — to The Wine Group, a California-based producer with a strong footprint in value-driven wines, as was reported by The Wall Street Journal. The sale, whose financial terms were not disclosed, also encompasses associated vineyards and production facilities and is expected to close by the end of the current fiscal quarter.

The divestment is part of Constellation’s strategy to reposition its wine and spirits division around higher-end offerings, focusing on bottles priced over $15. The Wall Street Journal reported that its streamlined wine portfolio will now center on premium labels such as Robert Mondavi Winery, Kim Crawford, Ruffino Estates, Ruffino Prosecco, and Lingua Franca.

The company is betting that a more refined product mix will better reflect current market dynamics, where younger and more affluent consumers are gravitating toward quality over quantity. In this context, lower-priced brands like Woodbridge and SIMI, while still profitable, no longer align with Constellation’s long-term vision for growth and brand equity.

Simultaneous with the brand divestiture, Constellation will also undertake a comprehensive organizational review, with the aim of enhancing operational efficiency and slashing costs. The restructuring plan is projected to yield more than $200 million in savings by 2028, with much of the foundational work to be completed within 2025, according to the information provided in The Wall Street Journal report.

This internal overhaul complements Constellation’s external strategic reset and underscores its intention to remain agile in a challenging market landscape.

While Constellation’s most recent quarterly report showed an uptick in overall sales, the company revised its beer business forecast downward, acknowledging that recent tailwinds may not be sustainable. The Wall Street Journal report indicated that after posting a 5% increase in beer sales over the past year, Constellation now anticipates flat to 3% growth for the upcoming fiscal year, with growth in the 2% to 4% range expected for the two years following.

This marks a stark departure from its earlier guidance, which forecasted 7% to 9% medium-term growth in beer sales. According to The Wall Street Journal, the company attributed the slowdown to soft economic activity in labor-intensive sectors, such as construction, as well as broader consumer pessimism impacting discretionary spending.

Modelo Especial, currently America’s best-selling beer, helped cushion the impact, but even its strong brand equity was not enough to offset macroeconomic headwinds and a dip in unit shipments.

Constellation also issued a weaker-than-expected profit outlook for its fiscal 2026 year, forecasting adjusted earnings per share between $12.60 and $12.90, as per The Wall Street Journal report. That falls well short of analysts’ consensus expectation of $13.94, as surveyed by FactSet.

The disappointing guidance came alongside the announcement that Constellation had swung to a $375.3 million net loss in its fiscal fourth quarter, compared to a $392.4 million profit in the same period last year. The company cited impairment charges related to asset write-downs as the main driver of the red ink.

Still, adjusted earnings per share came in at $2.63, beating the $2.28 forecast, while sales rose 1.2% to $2.16 billion, just ahead of analyst expectations of $2.13 billion. The wine and spirits division, in particular, saw a strong 11% increase, largely due to volume growth in U.S. wholesale channels and international markets.

However, the overall investor response was negative. Shares of Constellation fell 4.4% in late trading, closing at $175.25, with the stock now down nearly 33% year over year, The Wall Street Journal reported.

Constellation Brands now finds itself at a strategic inflection point. With its legacy beer brands facing a flattening trajectory and consumer interest shifting toward more premium and experiential alcohol categories, the company is making bold moves to streamline operations and elevate brand prestige.