Constellation Brands (NYSE:STZ) announced the divestiture of its Svedka vodka brand to Sazerac, a leading global spirits company. The transaction is anticipated to be finalized in the upcoming months. Svedka vodka accounts for a low single-digit percentage of Constellation Brands' net sales and approximately 1% of U.S. scanner data.
However, it represents a significant portion of the company's spirits sales, over 75%, and around 11% of its wine and spirits (W&S) segment sales according to Nielsen data.
Constellation Brands has indicated that this move is in line with its strategy to realign its wine and spirits portfolio to better match changing consumer tastes and the dynamics of the market. The company is concentrating on the premium segment of the wine and spirits market.
Citi has expressed a positive outlook on the sale, noting that it will eliminate an underperforming brand from Constellation Brands' portfolio. This step is seen as a continuation of the company's efforts to streamline its wine and spirits segment.
The sale of Svedka is part of Constellation Brands' broader strategy to focus on higher-end, more profitable categories within the beverage alcohol market. This is reflective of a trend where companies are adapting to shifts in consumer preferences, which increasingly favor premium products.
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