Constellation Brands to overhaul share structure 

Constellation Brands is set to shake up its shareholding arrangements through a deal with the family that holds majority voting control of the US business. 

The Corona beer brewer has struck a deal with the Sands family to eliminate the group’s Class B shares. 

At present, the family, through the Class B stock, holds about 60% voting control of Constellation Brands. The proposal, approved by the company’s board and set to go before a shareholder meeting, will take that percentage down to circa 20%. 

“The proposed share reclassification will strengthen the company’s corporate governance profile by aligning voting rights with the economic interests of all shareholders,” Constellation Brands president and CEO Bill Newlands said. “In addition, the company’s simplified capital structure will provide a solid foundation as the company continues to pursue its strategic growth initiatives and capital allocation priorities to build shareholder value.” 

Under the terms of the deal with the Sands family, each outstanding share of Class B common stock, including those owned by the family, will be converted into the right to receive one share of Class A common stock plus cash. The cash element will be US$64.64 per share of Class B common stock or a total amount of $1.5bn. 

Once the changes to the Constellation Brands share structure are in place, Robert and Richard Sands – the group’s executive chairman and executive vice-chairman – will step down from their roles. 

Robert Sands will become non-executive chairman, while Richard will retain a seat on the company’s board. Constellation Brands expects the Sands family will continue to be its largest shareholder. 

The announcement of changes to the Constellation Brands share structure came alongside the publication of its fiscal first-quarter results, which included rising net sales and underlying income on the corresponding period twelve months ago. 

Sapporo to buy US craft beer maker Stone Brewing 

Sapporo Holdings, the Japanese drinks major, has snapped up US craft beer maker Stone Brewing. 

Under the terms of the deal, Sapporo has paid US$165m for the California-based brewer. A further $3m was put up in advisory fees. 

Earlier this year, it was reported Stone Brewing owed investors more than $460m and had considered a sale of the business to raise the funds. 

Speaking in court as part of an ongoing trademark infringement trial against MillerCoors (now part of Molson Coors Beverage Co.), Stone Brewing CEO Maria Stipp reportedly admitted the San Diageo-headquartered brewer was unlikely to meet a June 2023 deadline to pay back the money. The deadline had been originally submitted by investment firm VMG/Hillhouse. Stone Brewing initially received $200m from Hillhouse Capital and VMG Partners to fund expansion in October 2018. 

Announcing Stone Brewing’s sale to Sapporo, Stipp said: “This unique partnership allows us to preserve the Stone legacy that our fans know and love and will add exponential opportunities for growth, from production to more investment in people, equipment, sales, and marketing.” 

Sapporo plans to produce its eponymous beers for US distribution in Stone Brewing’s factories, which are located in California and Virginia. The Japanese group said it intends to brew 360,000 barrels in the US by the end of 2024, a level it said will “essentially double Stone Brewing’s current production and provide ample opportunities for growth for both brands”. The deal includes Stone Brewing beers including Stone IPA. 

In a separate statement, Sapporo Holdings – which bought San Francisco’s Anchor Brewing Co. in 2017 – said Stone Brewing generated net sales of $230.1m in 2021 and made an operating loss of $9.6m. 

Stone Distributing Co., Stone Brewing’s distribution business, is not part of the deal. The firm, which supplies southern California, will become an independent company under its current ownership. 

The assets changing hands are expected to turn a profit in 2023, Sapporo Holdings said, pointing to the prospect of efficiency gains from upping beer production. 

The company said it had been weighing up acquisition targets in the US to grow its own brand and snap up others. 

Campari adds to cabinet with Del Professore buy  

Campari has again added to its spirits portfolio through M&A, snapping up Italian peer Del Professore. 

Rome-based Del Professore, set up by bartenders in 2013, markets vermouth and gin. 

Campari, which owns Cinzano vermouth, as well as gin brands including Bulldog and O’ndina, said the acquisition “aims to solidify its position in the super-premium craft vermouth and gin categories”. 

Financial terms were not disclosed. Campari said the deal will see one of the founders of Del Professore, Leonardo Leuci, work for the group as a brand ambassador. 

The acquisition comes two months after Campari acquired the bitter liqueur brand Picon from Diageo for EUR119m (U$S120.8m). 

The addition of Del Professore to the Campari cabinet was announced alongside the publication of the Aperol maker’s first-half results. 

On an organic basis, Campari’s net sales rose 19.2% in the six months to 30 June. The group said the result represented a 45% increase on the first half of 2019 – or a three-year CAGR for its organic net sales of 13.2%. 

Reported net sales grew 25.6% to EUR1.26bn, further boosted by the strong US dollar. 

First-half EBIT was up 33% at EUR288.9m. Group net profit rose 24.8% to EUR199.1m. 

CEO Bob Kunze-Concewitz said: “Overall, we had a very strong performance in the first half, particularly the high-margin aperitifs in European markets, thanks to strong underlying momentum and on-premise recovery, boosted by favourable weather conditions and pricing.” 

He added: “Looking at the remainder of 2022, though volatility and uncertainty remain due to the ongoing pandemic and geopolitical tensions, we remain positive on the underlying momentum of key brand-market combinations. Whilst our shipment performance is expected to reflect some temporary supply constraints, we expect to partially mitigate the less favourable sales mix and the accelerating inflationary pressures exacerbated by logistics costs, via planned price increases and operational efficiencies.” 

Campari has maintained its forecast for flat organic EBIT-adjusted margin in 2022. 

The company, meanwhile, also announced it had handed the role of COO to CFO Paolo Marchesini, who will continue in both jobs. 

Diageo shuffles top team with new COO appointment 

Diageo has appointed former PepsiCo and Nestlé executive Debra Crew to the role of chief operating officer. 

Crew’s appointment to the role at the London-headquartered group’s top table follows a two-year stint as the president of its North America division, where she also led on global supply. Diageo last had a COO in 2012.  

As COO, Crew will take accountability for driving “continued performance momentum” across the group’s markets, brands and supply operations globally, Diageo said. 

Prior to joining Diageo, Crew held positions at PepsiCo, Kraft Foods, Nestlé and Mars. Crew spent four years at PepsiCo, from 2010 to 2014, before which she worked for Mars for two years and Nestlé for another two. She serves on the board of US manufacturing firm Stanley Black & Decker.  

Replacing Crew in the role of North America president is Claudia Schubert, previously the president of Diageo’s US spirits and Canadian business unit. Both Schubert and Crew will report into Diageo CEO Ivan Menezes. 

Commenting on the appointments, Menezes said: “Debra and Claudia have proven track records as outstanding leaders inside and outside our company. Their appointments will ensure that we continue to adapt to the changing environment so that we can deliver our performance ambition while making a positive impact wherever we work, source and sell. "

Coca-Cola sells assets in Vietnam, Cambodia to Swire Pacific 

Swire Pacific, the Hong Kong conglomerate, has struck a deal to buy Coca-Cola bottling operations in Vietnam and Cambodia. 

The Hong Kong-listed Swire is to pay US$1.02bn for the assets. 

In a stock-exchange filing, Swire said the acquisition marked its entry into south-east Asia’s drinks sector. It added the transaction would expand its existing drinks business into one of the “most rapidly growing beverages markets”. 

The deal has been carried out via two Swire Pacific subsidiaries – Swire Coca-Cola Limited and Swire Beverages Holdings Limited – with Coca-Cola (Japan) Co. Ltd., an indirect, wholly-owned subsidiary of The Coca-Cola Co, the selling party. 

Swire Pacific said the transaction will be funded through its “internal resources and existing banking facilities”. Subject to anti-trust approval, the acquisition is expected to be completed within six months. 

Swire Coca-Cola already bottles the drink in Hong Kong, Taiwan, parts of mainland China and the US. The group manufactures 62 beverage brands and distributes them to 762m people worldwide, according to its website. 

In 2016, Swire Pacific bought Coca-Cola bottling assets in China from China Foods, part of Chinese state-owned group COFCO, for CNY5.87bn (then US$852m). The group also acquired the 12.5% of drinks venture Swire Beverages it did not already own from The Coca-Cola Co. 

E&J Gallo Winery enters American whiskey with Horse Soldier Bourbon investment 

E&J Gallo Winery has added another brand to its Spirit of Gallo division, making a “strategic investment” in small-batch American whiskey maker Horse Soldier Bourbon. 

The deal – terms of which were not disclosed by either party – will see Spirit of Gallo begin distributing the brand in the US. Horse Soldier Bourbon is sold in 17 states across the country. 

"Today marks an important date in Gallo company history as Spirit of Gallo enters the large and rapidly growing American whiskey category,” said the unit’s general manager Britt West. “Horse Soldier Bourbon has built an extremely loyal consumer following and will allow us the opportunity to serve our partners and customers in new and exciting ways.” 

Horse Solider Bourbon was founded in 2016 by John Koko, Elizabeth Pritchard-Koko, Scott Neil, alongside US soldiers that entered Afghanistan on horseback after the 9/11 terrorist attacks. 

West said the brand represented “an alignment of family values, legacies and pioneering spirits”. He added Spirit of Gallo would look to expand the “visibility and availability” of its range across the US. 

Horse Solider Bourbon’s roster comprises three expressions: Straight Bourbon Whiskey (SRP US$49.99), Small Batch Bourbon Whiskey ($69.99), and Barrel Strength Bourbon Whiskey ($79.99). 

Earlier this year, E&J Gallo Winery set up Spirit of Gallo as a dedicated umbrella business unit for its spirits operations. The unit represents 24 spirits brands, including New Amsterdam Vodka, Camarena Tequila and RumHaven, as well as Gallo’s hard seltzer brand, High Noon. 

It also looks after the US importing responsibilities held by Gallo for the likes of Whyte & Mackay’s Dalmore single malt Scotch whisky and Diplomatico rum, owned by Venezuela-based Destilerias Unidas.