Decision aligns with wine and spirits business transformation strategy
US headquartered Constellation Brands, Inc. a leading beverage alcohol company has signed an agreement with Heaven Hill Brands to divest Black Velvet Canadian Whisky and the brand’s associated production facility in Lethbridge, Alberta, Canada, along with a subset of Canadian whisky brands produced at that facility.
The company expects to receive cash proceeds of approximately $266 million, subject to closing adjustments. This transaction is subject to regulatory approvals and is expected to close in the second half of calendar 2019.
“We are relentlessly focused on the consumer and building a portfolio of brands consumers love today, while pushing beyond to meet their evolving needs well into the future,” said Bill Newlands, Constellation Brands president and chief executive officer. “This decision aligns with our consumer-led premiumization strategy to deliver accelerated growth and shareholder value as we continue to focus our wine and spirits portfolio on higher-end, fast-growing brands. For Heaven Hill, Black Velvet is a historic, well-known, and high-volume brand that complements their broad distilled spirits portfolio and aligns with their business strategy.”
Constellation’s powerhouse portfolio of spirits brands include SVEDKA Vodka, the #1 imported vodka in the U.S.; High West Whiskey, Casa Noble Tequila, Mi CAMPO Tequila, and Nelson’s Green Brier. Constellation’s ventures capital group has made minority investments in higher-end, distinctive spirits brands such as Austin Cocktails, Bardstown Bourbon Company, El Silencio, The Real McCoy, and its most recent investment in Montanya Distillers.
The net sales for the brands included in the transaction totaled $67 million during Constellation’s fiscal year 2019, and the purchase price represents a multiple of gross profit after marketing in the range of eight to nine times.