The shocking announcement today that the Ontario Teachers’ Pension Plan has bought Constellation Brands Canada, the Canadian operation of the drinks giant Constellation Brands, for approximately $1.03 billion, could be good news for the Canadian wine industry.
The transaction, expected to close before the end of the calendar year, puts a once proud Canadian company, then called Vincor, back into the hands of Canadians.
Constellation Brands is a publicly traded, international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy. The Canadian wine business of Constellation Brands is the market leader in Canada with approximately three times the market share of its closest competitor and 7 of the top 20 wine brands in the Canadian market.
“Constellation Brands Canada is an ideal addition to our Consumer Portfolio,” said Jane Rowe, Senior Vice-President, Private Capital. “The company is already the undisputed market leader in the Canadian wine industry and has excellent potential for continued growth and value creation.”
Constellation Brands Canada is headquartered in Mississauga and operates three commercial wineries, five estate wineries, and 163 Wine Rack stores throughout Ontario. Its diverse portfolio of domestic and international wines includes such well-known names as Inniskillin and Jackson-Triggs (above). Teachers’ will continue to distribute the company’s international brands, such as California’s Robert Mondavi and New Zealand’s Kim Crawford, according spokeswoman Deborah Allan.
“We look forward to partnering with Constellation’s impressive management team and president and CEO Jay Wright to capitalize on long-term growth trends in the wine industry,” said Rowe. “Constellation delivers stable and predictable cash flows and provides us with an excellent investment platform in this growth industry.”
“Our Canadian management team is excited about working with Ontario Teachers’ to take our business vision to the next level,” said Wright. “Their financial commitment and considerable expertise in helping their portfolio companies achieve meaningful strategic market advantages set the stage for an exciting partnership.”
Donald Triggs, the mastermind behind Vincor (the company that was bought by Constellation in 2006 in a not-so-friendly sale), resigned from the company the day after Constellation bought it. “I think I’m going to live 10 years longer,” he told me for a story I wrote a few years ago.
One of Triggs’ greatest disappointments was losing the 95-acre Delaine Vineyard in Niagara he and his wife Elaine had worked so hard to plant and nurture. Constellation insisted that it was part of the deal, and crucial to the top-tier wines at Jackson-Triggs. “We didn’t want to sell, but Constellation made it a final condition of the sale,” Triggs said.
Today, I reached Triggs, shown in very top photo, and he had this to say about the sale back into Canadian hands:
“I see this as very good news for the Canadian industry primarily because Constellation Canada, a.k.a. Vincor, is the largest Canadian wine company and as such has a responsibility and the opportunity to be a leader in the industry,” said Triggs. “A return to Canadian ownership has the potential to create a new focus on what is best for the Canadian industry.”
Like all the former Vincor execs, Triggs went on to achieve great things.
He built the Culmina Family Estate Winery (pictured above), located on the Golden Mile Bench in the Okanagan Valley. The state-of-the-art winery is situated on the vineyard estate purchased by the Triggs in 2007 after an exhaustive search to locate the perfect land to develop icon quality wine.
The first vines were planted in 2009 with two adjoining benches planted using the same meticulous scientific method, with a third bench planted soon after. Varietals include Cabernet Sauvignon, Cabernet Franc, Merlot, Chardonnay, Riesling, and Gruner Veltliner.
“Our passion for creating icon quality wines is stronger than ever. What I have treasured most has been the opportunity to develop Culmina’s vision with my family.”
To see a post about where the former Vincor executives and main players are today, and the story of the sale to Constellation Brands, go here.
The Grape Growers of Ontario also reacted to news of the sale today, saying it was “cautiously optimistic” about the deal.
The sale “sends a very positive signal that the Canadian wine industry is ready and well-positioned for expansion,” said Grape Growers of Ontario CEO Debbie Zimmerman.
According to the Wall Street Journal, many potential foreign and domestic bidders were interested in participating in Constellation’s auction process.
“The fact the Ontario Teachers’ Pension Plan is a well-financed, domestic, long-term investor with industry experience and no competing business interests leaves us hopeful that their plan for profit growth will come from expansion rather than international or domestic consolidation,” Zimmerman added.
“Constellation Brands has been a valuable player/partner for our growers. While it’s far too early to know the exact market and public policy implications of this sale, there is no doubt that the sale of a business that so dominates the Canadian wine market is likely to have significant impacts on the industry as a whole,” said Chair of the Grape Growers of Ontario board of directors, Matthias Oppenlaender.
“While we are cautiously optimistic this is a growth opportunity, we will be watching and listening carefully,” Oppenlaender added. “We look forward to learning about the new owner’s business plans and to working constructively with them to build on the continued success of Ontario’s grape and wine industry.”
Richard Linley, president of the Wine Council of Ontario, said: “It’s hard to predict the long-term impact from today’s announcement, but my members are hopeful that any pending changes in ownership will continue to contribute to the ongoing and future success of the Ontario VQA wine industry.”
Note: Wines in Niagara will be updating this post has reaction becomes available.
About Ontario Teachers’
The Ontario Teachers’ Pension Plan (Ontario Teachers’) is Canada’s largest single-profession pension plan, with $171.4 billion in net assets at December 31, 2015. It holds a diverse global portfolio of assets, 80% of which is managed in-house, and has earned an annualized rate of return of 10.3% since the plan’s founding in 1990. Ontario Teachers’ is an independent organization headquartered in Toronto. Its Asia-Pacific region office is located in Hong Kong and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded, invests and administers the pensions of the province of Ontario’s 316,000 active members and retired teachers.
About Constellation Brands
Constellation Brands (NYSE: STZ and STZ.B) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy. Constellation is a Fortune 500 company and one of the top performing stocks in the S&P 500 Consumer Staples Index. Constellation is the No. 3 beer company in the U.S. with high-end, iconic imported brands, such as Corona Extra, Corona Light, Modelo Especial, Modelo Negra and Pacifico. The company’s beer portfolio also includes Ballast Point, one of the most awarded craft brewers in the U.S. In addition, Constellation is the world’s leader in premium wine selling great brands that people love, including Robert Mondavi, Clos du Bois, Kim Crawford, Meiomi, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company’s premium spirits brands include SVEDKA Vodka and Casa Noble Tequila.