Constellation Brands to Sell Svedka Vodka to Sazerac for Undisclosed Amount
Constellation Brands, Inc. has announced that it will sell its Svedka vodka brand to New Orleans-based spirits company Sazerac. The transaction is expected to close in the coming months, but the company did not disclose the value of the deal.
The sale of Svedka is part of Constellation’s efforts to reshape its wine and spirits portfolio and to focus on its beer business. In a press release, CEO Bill Newlands said, “This transaction is another step forward in seeking to ensure that our wine and spirits portfolio is optimized to succeed and to meet our growth objectives.”
Constellation’s wine and spirits business has been struggling, with shipments dropping 9.8% year over year in the second quarter and net sales and operating income falling 12% and 13%, respectively. The segment accounted for just 5% of the company’s volumes but 17% of net sales, with the majority of new sales coming from wine rather than spirits.
Sazerac, a privately-owned company, will add Svedka to its portfolio of brands, which includes Buffalo Trace bourbon, Fireball Cinnamon Whisky, and Southern Comfort, among others. Constellation’s spirits portfolio will continue to own High West Whiskey, Mi Campo Tequila, and Casa Noble Tequila.
Analysts at Bernstein welcomed the news, saying that the divestment of Svedka is a clear positive for the segment’s future growth prospects and signals that management is willing to make tough decisions to evolve the business. The company’s ability to make such a move is seen as a positive for corporate governance.
Additional details around the transaction will be provided at the Morgan Stanley Global Consumer and Retail Conference on December 3.