Constellation Brands pinpoints pinot noir for long-term success with Meiomi acquisition

By Rachel Arthur contact

- Last updated on GMT

Meiomi: bought by Constellation Brands for around $315m
Meiomi: bought by Constellation Brands for around $315m

Related tags: Chardonnay

Constellation Brands sees pinot noir as a solid prospect for its long-term future, boosted by the $315m acquisition of Meiomi wines this week. 

Rob Sands, president and CEO, Constellation Brands, believes Meiomi will follow in the footsteps of the successful Mark West brand, and broaden its reach in the pinot noir category.

Luxury brand Meiomi was established in 2006, and has grown from a 60,000 case brand in 2010 to around 600,000 cases in 2014. IRI dollar sales grew more than 50% in the last 52 weeks.

The purchase price for the brand is around $315m, with the transaction expected to close in August.

Constellation Brands, which released its Q1 2016 results yesterday, has seen improved market trends in its US wine business and better than expected results in Canada. Wine and spirit net sales, on a constant currency basis, increased 4%.

‘Pinot for the people’

Constellation Brands completed the acquisition of pinot noir specialist Mark West for around $160m in 2012. The wine is described as a quality Pinot Noir at an affordable price – a ‘Pinot for the People.’

Meiomi wine is described as ‘richly flavoured, well-balanced and stylish,’ suitable for drinking with food or on other occasions. It is created from a blend of California pinot noir coastal regions (specifically Santa Barbara County, Monterey County and Sonoma County). The company also added a chardonnay to its pinot noir portfolio last year.

Meiomi will widen Constellation Brands’ coverage of the pinot noir sector and fill a niche in Constellation’s luxury portfolio, the company says. Meiomi’s recent rapid growth proves the brand resonates with consumers, it added.

“Mark West covers the $10 to $12 pinot noir range, and Meiomi covers the $20-plus pinot noir range,” ​said Sands in yesterday’s earnings call. “So that puts us in a really strong position in one of the fastest growing and most stable segments of wine, which is the pinot noir varietal in particular.”

Taste preferences are changing

Sands sees pinot noir growing in the long term. 

“We tried to stay away from some of the - I’m going to say trendier stuff -  that has the tendency to kind of go up and down," ​he said, speaking about the company's acquisitions. "You take Meiomi, you take Mark West - classic brands in a category. In this case, pinot noir, which is not trendy, but fast growing and will continue, we believe, to be a fast growing varietal as people continue to discover pinot noir. And we think taste preferences are on a long-term basis changing towards pinot noir.”

Sands said Meiomi represents a ‘high-growth, high-margin accretive complementary tuck-in’ to Constellation’s existing wine portfolio.

“Meiomi can be efficiently integrated into our distribution platform to provide synergies, scale and root-to-market benefits and it is very similar to our successful Mark West acquisition,” ​he said. 

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