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Constellation buys Santa Barbara vineyard in higher-end wine push

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Dive Brief:

  • Constellation Brands has agreed to acquire Sea Smoke, a producer of pinot noir and chardonnay, along with their estate vineyard in the Santa Rita Hills area of Santa Barbara, California. The financial terms of the deal were not disclosed.
  • The alcohol giant said the purchase follows its goal to pursue growth in higher-end wines. Last June, the alcohol producer acquired Domaine Curry, the premium wine brand co-founded by NBA star Stephen Curry’s wife Ayesha Curry.
  • Sea Smoke’s wines will join others in Constellation’s portfolio including Kim Crawford, Robert Mondavi and Meomi, and signals a continued interest in the pricier wine category despite the overall category facing declining sales.

Dive Insight:

The wine industry is in trouble with younger consumers. Consumption of the drink declined 8.7% in 2023, largely driven by declines from Gen Z drinkers, according to Gomberg Fredrikson Report data cited by the San Fransicso Chronicle.

Constellation’s latest vineyard purchase reflects that while the wine category is losing ground to trendy beverage options like canned cocktails and hard seltzer, major players in the industry still see the potential for more expensive offerings.

“Not only does Sea Smoke offer a uniquely acclaimed estate vineyard in the Santa Rita Hills AVA, but its highly acclaimed wines also align with our target consumer preferences as they continue to shift to the higher end,” said Sam Glaetzer, president of Constellation’s wine and spirits division, in a statement. “We look forward to working with the Sea Smoke team to grow this exceptional winery while upholding its impeccable tradition of quality and customer experience.”

In January, Constellation CEO Bill Newlands told investors on its quarterly earnings call that the company would reshape its wine team to improve its performance among the pivotal Gen Z demographic while predicting losses of 7% to 9% in the wine and spirits category in 2024.

Despite Gen Z’s reluctance to imbibe in it, premium wines are poised to continue growing, making up roughly three in every 10 liters of wine consumed in the U.S., a 10% growth over the past decade, according to IWSR data.

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