With its $1.1 billion (A$1.9 billion) purchase of Australian wine giant BRL Hardy, Constellation Brands will rival E. & J. Gallo as the largest wine producer in the world. The deal, revealed late this week, is a blockbuster, surpassed only by Foster's $1.5 billion purchase of Beringer Wine Estates in 2000.
Already one of the world's biggest wineries, the Fairport, N.Y.—based Constellation will have $1.7 billion in annual wine sales once the purchase is complete.
"This is a tremendous addition to Constellation's portfolio," company CEO Richard Sands said in a statement.
Constellation has been on a buying spree in recent years, although it hasn't purchased anything on this scale. The company's existing brands include fine wine labels such as Franciscan, Estancia, Mount Veeder, Ravenswood and Simi in California and Covey Run and Columbia wineries in Washington, but its bread and butter are mass-produced brands such as Almaden, Arbor Mist and Paul Masson.
BRL Hardy brands include Hardys, Banrock Station, Chateau Reynella, Leasingham and Yarra Burn in Australia, along with Nobilo in New Zealand. It also owns the distribution rights for Barossa Valley Estate, a high-end growers cooperative that makes the fabled E&E Black Pepper Shiraz. Last summer, the company formed a joint venture with Stellenbosch Vineyards in South Africa to produce new wines from the Cape region.
Constellation and BRL Hardy already have a strong relationship. The two joined forces in June 2001 to create Pacific Wine Partners, a Gonzales, Calif.—based venture that markets Hardy's wines in the United States and also produces Farallon and Blackstone wines.
Sands offered few details on the structure of the combined companies, but said that BRL Hardy managing director Stephen Millar will become CEO of Constellation's wine division.
Read more about Constellation, Hardy and Pacific Wine Partners:
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