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Constellation Brands to offload Black Velvet Canadian Whisky to Heaven Hill Brands

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Constellation Brands is to sell Canadian whisky Black Velvet to US peer Heaven Hill Brands for US$266m.

Black Velvet is the second-largest selling Canadian whisky brand

Black Velvet is the second-largest selling Canadian whisky brand

The sale, announced late yesterday, includes Black Velvet's Alberta distillery and is expected to close later this year, pending regulatory approval. According to Heaven Hill, which owns Evan Williams Bourbon and Deep Eddy Vodka, Black Velvet is the second-biggest-selling Canadian whisky after Diageo's Crown Royal.

The move continues Constellation's divestment of its lower-value brands. Group CEO Bill Newlands said yesterday the sale of the "well-known, and high-volume" Black Velvet fits with "our consumer-led premiumisation strategy" while also complementing Heaven Hill's broad spirits portfolio.

Constellation has cleared out a number of its brands in the past two years while bulking up on small-scale craft players. Earlier this year, the company announced the sale of about 30 wine and spirits brands to E&J Gallo, including Wild Irish Rose fortified wine, Paul Masson wines & brandy and Clos du Bois Californian wine. The brands are mainly priced at $11 retail and below.

Acquisitions include a minority stake in Colorado's Montanya Distillers last month and an increased share in Tennessee's Nelson's Green Brier Distillery. Four months ago, Constellation also secured a holding in Mezcal El Silencio in Los Angeles.

Also on the company's books are stakes in Black Button Distilling in New York and Kentucky's Copper & Kings American Brandy Co, as well as outright ownership of High West Distillery, based in Utah.

Commenting on the Black Velvet purchase, Heaven Hill said the company looked forward to growing the brand, which was first sold in 1951. The Palliser Distillery, where Black Velvet is made, was built by Diageo-forerunner International Distillers & Vintners in the 1970s. The distillery has since been re-named The Black Velvet Distilling Co.

Sales for Black Velvet in the most recent fiscal year were $67m. The purchase price represents a multiple of gross profit after marketing of about eight to nine times. Included in the sale are Constellation's other whisky brands produced at The Black Velvet Distilling Co, comprising MacNaughton, McMasters and the international business of the Schenley brands - Golden Wedding and OFC.

Constellation Brands Performance Trends 2015-2019 - results data


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