US: Constellation announces distributor realignment

By | 24 July 2009

Wine and spirit maker Constellation Brands has signed multi-year deals with four distributors in the US in a bid to streamline its distribution network.

The deals, which cover 19 US states, will see the maker of Robert Mondavi wines and Svedka vodka consolidate over half its portfolio with one distributor per market.

Constellation said the deals will enable the company to market its products more efficiently and improve its sales growth.

The company picked Southern Wine & Spirits of America, Republic National Distributing Co., National Wine and Spirits and Johnson Brothers Liquor Co.

Each company will have exclusive rights to sell Constellation's US portfolio of wines and spirits in certain markets.

Southern will have exclusive distribution rights in nine markets, consisting of Arizona, California, Delaware, Florida, Hawaii, Illinois, Kentucky, New York and Pennsylvania.

Republic National Distributing Company will have exclusive distribution rights in eight markets, consisting of Colorado, Louisiana, Maryland, Nebraska, Oklahoma, South Carolina, Texas and Washington D.C.

National Wine & Spirits will have exclusive distribution rights in Indiana and Johnson Brothers Liquor Company in Iowa.

"This is a new beginning for our US business and an important moment in Constellation's history," said Rob Sands, president and CEO of Constellation Brands. "It represents the culmination of an 18-month transformation within the US, during which we created an incredibly powerful portfolio of premium, consumer-preferred wine and spirits brands and now have carefully selected distributors for our next wave of growth.

He added: "Our new go-to-market strategy, and its inherent emphasis on driving organic growth in a growing category, is the natural next step for us and our distributors."

The realignment creates a number of benefits for Constellation, the company said, along with its distributors and its customers by creating "deeper, tighter relationships with distributors, along with improved coordination of marketing and promotional programmes supporting its brands".

Constellation said it will continue to work with and support its distributors in the remaining markets around the country.

A spokesperson for Constellation told just-drinks that 15 distributors submitted proposals for the deal and that the markets chosen were 19 out of a potential 30, the remainder of which will be looked at over the next 18 months.

Earlier this month Constellation saw branded wine sales fall by 10%. While spirits sales decreased by 43% in the quarter to $60m, the company highlighted the divestment of its "value" spirits business earlier this year as being the main contributor to this performance.

Group net profits also slid, dropping to $7m, down from $44.6m for the previous year, on a reported basis.

The spokesperson said: "This is a project that has been going on for quite some time. The results [Q1] were because of a number of different reasons, particularly the situation in the global economy. This programme is strategic for Constellation's growth over the long-term."

Sectors: Spirits, Wine

Companies: Constellation, Republic National Distributing Company, National Distributing Company

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