Constellation Brands sold around 30 brands to Gallo at the beginning of the year. The reason? They no longer fit into the company's "premiumisation strategy". But what does "premium" mean for the mega corporation? And what does the focus on premium brands mean for the German market?
Louisa Kretschmer, Sales Manager EMEA (Europe, Middle East, Africa), Sandro Sartor, Managing Director EMEA, and Taco Lucassen, Sales Director EMEA, answered our questions.
How important is the German market for Constellation Brands?
Sandro Sartor: Of course Germany is important. It is one of the largest import markets in the world. This makes it an important market for Constellation Brands, not only for our US brands, but also for our brands from Italy or New Zealand.
Which brands does Constellation focus on in Germany?
Louise Kretschmer: The main focus is on Robert Mondavi Winery. Here we have a fantastic partner in Wein Wolf. The vertical of Cabernet Sauvignon from 2014 to 2016 that we launched this year is an example of how much we believe in the brand. With the Robert Mondavi Private Selection, we have another drawing card. I am thrilled at how well the wines aged in spirit barrels have been received in Germany. Both Cabernet and Chardonnay from bourbon barrels and Merlot from rum barrels had a great start in the difficult times.
Taco Lucassen: Besides the wines from Robert Mondavi, we also focus on Ruffino and The Prisoner in Germany. In addition, there is Charles Smith, for which we cooperate with Weinkontor Freund, and Kim Crawford from New Zealand.
Louisa Kretschmer, Sales Manager EMEA
How do you want to communicate the Robert Mondavi brand?
TL: Robert Mondavi is about heritage. He is the founder of modern Californian viticulture and in particular the founder of Napa Valley as a wine origin. The message to consumers is that Napa started with Robert Mondavi. When he founded Woodbridge in Lodi in the 70s, he wanted to create wines for everyday use. In the 90s, Private Selection was added, occupying the space between Woodbridge and Robert Mondavi Winery. Private Selection stands for innovation and experimentation; Robert Mondavi Winery stands for finesse and a more European style.
Are you planning any campaigns in Germany?
LK: At the moment it is very difficult to plan any activities in Germany. The California Wine Institute is very brave and is planning a big show in Berlin for American Independence Day on 4 July. If that comes about, we will of course participate. Otherwise, we can't wait to get out and taste with our customers again.
TL: It's too early to make any plans. I think we will be able to do events again towards September, but probably not on the usual scale. The sizes of the participants will probably be reduced. In a hall for 1,000 people, maybe 200 will still be able to attend.
Sandro Sartor, Managing Director EMEA
That means they don't see a future for online tastings?
LK: Many are simply exhausted by online tastings now. We can't wait to enjoy wines together in a room again.
TL: We can well imagine hybrid solutions in the future, though. Sometimes it's just not possible to fly the winemaker in. But when we meet physically for a tasting with the trade, it can be a wonderful addition to bring in the winemaker, who can meet our customers in a completely different way than we can from sales.
In the industry, there are often different definitions of premium or super-premium wine. Where does Constellation draw the line?
SS: Very correct. For us, the premium range starts at US$11 retail price, and in Europe we draw this line at €6-7. For us, super-premium starts at €20, luxury wine at €50, and cult wine at wines over €100. By selling a larger portfolio of brands to Gallo, we are now completely focused on the premium business. This was preceded by an analysis of our brands. Even if it is not self-evident for the wine industry, we believe in brands and see ourselves as brand builders. But a brand needs clear distinguishing features, and these are most likely to be found in the premium and ultra-premium segment. Brands like Robert Mondavi or The Prisoner have personality, charisma and distinction. In addition, building brands requires investment, and that is best financed in areas with good margins.
At the beginning of April, Constellation said it was spinning off its Fine Wine division. How does that work?
SS: Eighty-eight percent of sales come from outside the Fine Wine division. But the much smaller part of Fine Wines from $40 dollars a central role for us, and it requires a different approach, which we are building in a team specialised in it. Our goal is to become the world's No. 1 in Fine Wine and to be among the Top 5 in Cult Wines.
Is this also reflected in the distribution in Europe?
SS: No, we are active in both business areas and have to look for the right partners for our goals.
Taco Lucassen, Sales Director EMEA
In recent years, the share of wine in Constellation's sales has declined in favour of beer. Constellation also made a name for itself with cannabis. Is there a danger that wine will become unimportant for the group?
SS: First of all, this is due to the strong development of the beer brand "Corona", which has enabled this division to achieve great growth in recent years. The fact that the wine segment has shrunk in recent years was not a decision against wine, but one for the premium segment of wine. With cannabis, one has to be careful. Constellation Brands is not in the cannabis business at all. We have only invested in companies that are.
Sustainability also has become an increasingly important concept. How does Constellation deal with this?
SS: At the moment, we are a bit further ahead in terms of sustainability in Europe than in the US, but sustainability is becoming more important there as well. The To Kalon vineyard of the Robert Mondavi Winery is the first vineyard to be converted to organic farming. Organic is still a niche in the US market, however. Soon, Constellation Brands will also communicate targets for water and CO₂ management. Water management in particular is of immense importance in drought-stricken California.
Diversity is another topic that has gained focus. How does Constellation deal with this?
SS: Here, the USA is further ahead than we are in Europe. For us, diversity is a very important topic. We are a company that is driven by its consumers. Just as our consumers are diverse, we as a company must also be diverse and inclusive. That's why we have set aside $100 million. By 2030, we want to use it to support start-ups by African American or women-led companies, for example.
The questions were asked by Alexandra Wrann and Clemens Gerke.
About Constellation Brands
Constellation Brands is the second largest wine company in the world after Gallo. Wine sales in 2020 were around €1.95 billion (out of total sales of around €6.88 billion). President and CEO is Bill Newlands. The group owns around 8,300 ha of vineyards. The most important brands are Woodbridge, Robert Mondavi Winery and Private Selection, Kim Crawford and Ruffino.
The Robert Mondavi Private Selection is very well received in Germany. The wines mature in spirit barrels, for example Cabernet Sauvignon from the Bourbon barrel