Constellation Brands is in advanced talks to sell its some of its low-end wine brands to E. & J. Gallo Winery, people familiar with the situation tell CNBC.
div > div.group > p:first-child"> Constellation, which also sells Corona and Modelo beers, had hoped its wine business would fetch $3 billion. However, the sale is expected to be around $2 billion or less, said one of the people. Talks, however, are still ongoing and could fall apart. Among the points being discussed are which brands will be part of the sale.
Sales of non-premium wine have slowed, as millennials focus increasingly on health and alternative indulgences like cannabis. When millennials do drink, they increasingly turn to premium wine or other drinks like spirits and craft beer. In the year leading up to this past November, sales of wines below $9 at retail dropped by 9 percent, according a closely watched report by Silicon Valley Bank.
In January, Constellation acknowledged to analysts the company has been"challenged by the lower end of [its wine] business, which in totality has been flat or down."
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