Constellation Brands Inc., the world's biggest wine company, is selling its Almaden and Inglenook wine brands and the Paul Masson winery in Madera, Calif., to Wine Group for $134 million in cash.
Constellation Brands said Wednesday that the deal with San Francisco-based Wine Group was part of its push in recent years to stake a bigger claim in the more profitable end of the U.S. wine market by focusing on premium brands.
Almaden and Inglenook retail for less than $3 per 750-milliliter bottle.
The sale probably will result in a loss of about $27 million, or 13 cents a share, Constellation Brands said. It now expects to earn 93 cents to 98 cents a share for the 2008 fiscal year, or $1.33 to $1.38 a share excluding charges and gains.
In December, Constellation Brands bought the U.S. wine business of Fortune Brands Inc. for $885 million, boosting its collection of $8 to $11 wines with popular brands led by Clos du Bois, Wild Horse and Geyser Peak. It also acquired five California wineries and more than 1,500 acres of vineyards in the Napa, Sonoma and Los Carneros grape-growing regions.
"This transaction, when coupled with the recent acquisition of Clos du Bois, the No. 1 super-premium U.S. wine brand, will allow our wine sales forces to focus on selling higher-growth, higher-margin premium wines," said Rob Sands, Constellation Brands' chief executive.
The Fairport, N.Y.-based company's 300-plus brands include jug wines and prominent California wines such as Robert Mondavi, Ravenswood and Estancia, beer imports such as Corona and St. Pauli Girl; and liquors such as Fleischmann's vodka, Skol gin and Black Velvet Canadian whiskey.
Closely held Wine Group is the third-largest U.S. winemaker after Constellation Brands and E. & J. Gallo Winery. It was formed in 1981 to buy Coca-Cola Co.'s wine assets and is known for its Franzia wine in a box.