Word: canandaigua
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Move over, Gallo. The title of world's largest vintner will soon go to Constellation Brands, whose Canandaigua Wine subsidiary was featured on our cover in October. Constellation is swallowing Australia's largest vintner, BRL Hardy, to form a global giant that will boast $1.7 billion in annual wine sales. Based in Fairport, N.Y., Constellation already owns such mass-market wines as Almaden and Inglenook and was running a joint venture with BRL before deciding to buy it for $1.4 billion. "There is no Coca-Cola, Microsoft or Nestle of the winemaking world," says BRL managing director Stephen Millar...
...Canandaigua's parent, Constellation (which distributes Corona beer in the U.S. in partnership with Grupo Modelo), has also been on the acquisition trail. In 1999 it acquired Franciscan Estates in Napa, whose bottles sell for $20 and up. Franciscan added Ravenswood and Simi to its higher-end collection last year. Together they sold 2 million cases for $140 million in 2001. More acquisitions are likely for the Franciscan group and Canandaigua. "We will look around the world," says Constellation's CEO, Richard Sands. "An Australian acquisition, maybe, or Italian or Spanish...
...Canandaigua's brochures boast that the company sells the equivalent of 1,479,452 standard bottles of wine each day. But Moramarco knows that size isn't everything. The U.S. is the world's fourth largest wine producer--after France, Italy and Spain--but it ranks 35th in per-capita consumption. What the industry calls "core drinkers"--those who consume wine at least once a week--comprise 19 million Americans, according to research by the Wine Market Council. Another 29 million Americans drink wine at least once every three months. And both numbers have declined since 1994. Per-capita consumption...
Moramarco's acquisitions for Canandaigua are aimed at easing the company away from the jug-wine market toward the least expensive varietals--wines labeled Cabernet, Merlot, Chardonnay and such--selling at $3.50 to $5, and the slightly more expensive premium wines priced at $7 or more. This move upmarket is happening across the industry, from the behemoth Gallo to medium-size upscale wineries that must increase revenue or fall victim to takeovers--particularly in Napa, whose prestigious name puts it on the wish list of every ambitious wine company in the world...
...Back at Canandaigua, Moramarco values his Italian ancestry, but his business methods are all-American. The consolidation process, he says, is only beginning: "It won't be so apparent. You won't see a bunch of different wineries closed down--just different corporate ownership." Asked who might be next on the acquisition list, he smiles and says, "A lot of conversations are going on." And he heads off to catch a plane. --With reporting by Maryann Bird/London, Lisa Clausen/Melbourne, Adam Smith/Paris and Mimi Murphy/Rome