The big story that broke yesterday was that Constellation are offloading some of their American wine estates, using the proceeds of the sales to repay debts. What’s interesting is that they’re offloading some of the better wineries in California – Gary Farrell, Geyser Peak and Buena Vista for example – and what’s kind of ridiculous is that they bought these estates only 7 months ago.
Is it just me or does this sound like Constellation have begun flipping wineries now? I think you have to question what level of damage it can do to a solid producer to have three different sets of management in one year, all with differing ideas on driving profit margin through “adapting output”…
Think of these wineries like David Beckham – he’s doing fine at the academy as a youngster (privately owned) until he’s promoted to the senior team at Man Utd (Allied Domecq). Talent is obvious, but so is marketability and he gradually becomes a brand as opposed to a unique product. Real Madrid (Constellation) come calling and buy an over-priced brand, not the product. Realise very quickly that he’s not as fit as he used to be and offload him to LA Galaxy (Ascentia Wine Estates) who are happy to trade on his former standing. Gradually what made him unique is forgotten, and his haricuts/sarongs/tattoos become more important.
OK so a little simplified, and possibly a bit presumptive of Ascentia as they are a brand new company. It must be all the soccer on tv…
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