Constellation Brands is to streamline its wine operations in Australia as it looks to cut costs in an "intensely competitive" market.

The US drinks giant, which owns Australia's Hardy Wine Company said that it will buy out grape and processing contracts and offload "certain non-strategic assets" in the country.

The company also plans to restructure its bottling and distribution operations in the UK. Constellation said it will consolidate its supply chain in the UK, which includes plans to build a distribution centre and expand bottling operations.

The moves come as Constellation reviews it global business in the wake of its recent takeover of Canadian wine producer Vincor International.

"Both the UK and Australian markets are intensely competitive," said Constellation's president and COO Rob Sands yesterday (2 August). "It is essential that we continue to identify and harvest opportunities to reduce our operating costs and improve our returns to maintain our competitive advantage."

The strength of larger retailers in the two countries has led to pressure on the price of wine and producers in Australia have also faced a growing wine glut.

Constellation said it expects the projects to cut net operating costs by US$5m in fiscal 2008, and by over US$15m a year from fiscal 2009 onwards.