Constellation Brands Inc. announced a deal Wednesday to purchase the Napa Valley-based Meiomi wine brand for $315 million, the latest marker of consolidation in the North Coast wine industry as vintners stock up on labels priced at $20 or more per bottle.
The Victor, N.Y., company said the acquisition will help it gain a bigger share of the premium wine market, allowing Constellation to leverage its vast production facilities and vineyards to expand the fast-growing Meiomi brand.
The deal includes only Meiomi’s existing inventory and brand, which was founded by Joe Wagner in 2006. The label is noted for its pinot noir and chardonnay sourced from Sonoma, Monterey and Santa Barbara counties, growing from 60,000 cases in 2010 to almost 600,000 cases in 2014. Retail sales jumped more than 50 percent over the past year, fueled by significant growth in demand for its pinot noir.
“This strong record of growth demonstrates how well the brand resonates with consumers. We are excited about Meiomi’s prospects going forward under our efficient operating structure and strong route-to-market,” Rob Sands, president and chief executive officer of Constellation Brands, said in a statement.
Constellation Brands is the third-largest wine company in United States, selling 50 million cases annually, according to Wine Business Monthly. Locally, it owns Ravenswood, Simi Winery and Robert Mondavi wineries.
As part of the transaction, Wagner will stay on a consultant winemaker for two years. A fifth-generation winemaker, Wagner last year formed a new company, Copper Cane Wines & Provisions, which also includes a cigar line, Avrae, and Mia Marcelle, a swimwear line, as well as its Elouan, Carne Humana and Beran wine labels. It is separate from the Wagner Family of Wine, a business led by his father, Chuck Wagner.
“Copper Cane will refocus its efforts on our new developing brands that include Elouan, Beran and Carne Humana, while continuing to craft new products,” Wagner said in a statement. “We plan on acquiring land and facilities that will allow us an unbridled opportunity to grow beyond what even Meiomi has achieved.”
The sale, which is expected to close in early August, is the latest transaction this year by a large wine company in search of a premium North Coast wine brand. It follows E&J Gallo’s purchase of J Vineyards and Winery, The Wine Group’s surprise purchase of the Benziger Family Winery, and Jackson Family Wines buying Santa Rosa-based Siduri Wines.
It is notable because of the growing value of wine brands that are able to sell at luxury prices on a large scale. Meiomi is one of only three brands at a $20 price point that sell more than 500,000 cases domestically, a list that also includes Santa Margherita from Italy and La Crema from Jackson Family Wines, said Jon Moramarco, a wine industry consultant and former Constellation Brands executive.
“Companies are looking for wineries and vineyards that will add value to their portfolio,” Moramarco said. “People are trying to move up and break away from the $10 price point.”
The sale especially works well for Constellation Brands given its large capacity. “So much of the gross profit will fall to the bottom line rather than more facilities and overhead,” Moramarco said.
It also reflected a fairly high earnings multiple against other recent acquisitions, he added.