Friday, January 7, 2011

Constellation deal as clear as mud

A 'clarification' of the Constellation sale posted on the Wine Spectator website written by Tyson Stelzer makes the deal, as Alice in Wonderland might say, curiouser and curiouser. Apart from the fact that separate sale agreements have been entered into in respect to the Leasingham and Stonehaven wineries, with one voice Constellation reiterates it is selling the brands, but in the next breath says it will have no effect on the company's brands and distribution. Anita Poddar, Group Public Relations Manager is quoted as saying 'The arrangement is that existing portfolios and distribution channels will remain unchanged in the US, Australia and Europe.'

So the proposition is that Constellation, faced with a mountain of debt and unable to manage its businesses profitably, is selling the assets but retaining the burden of marketing and distribution. It is hard to see that it will have any incentive to protect the value of the brands, which it no longer owns, and would make me feel very uncomfortable if I were the purchaser of the assets.

I can't believe I understand the deal properly, and only wish that Tony Keys would hasten back from holidays to put the cleaner through it.

1 comment:

Tyson Stelzer said...

Hi James,

I look forward to learning more on this also. Constellation has not been forthcoming with the details, and the new owner, CHAMP, has refused to return my (many) calls. The teleconference that CHAMP had scheduled for Tuesday, at which it was expected to discuss details of the sale and hopes and plans for the manner in which the business will operate, was cancelled at the last minute with no explanation provided. Hopefully Tony will have more success banging on doors!



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