Constellation Brands offloads Black Velvet Whisky for $266m

Drinks giant Constellation Brands has agreed to sell Black Velvet Canadian Whisky to Heaven Hill Brands for US$266m in a deal which includes a production facility and other Canadian whisky brands made at the site.

Constellation said the sale to Bourbon specialist Heaven Hill aligns with its “wine and spirits business transformation strategy”. The transaction includes Black Velvet’s production site at Lethbridge in Alberta, Canada (the distilling operations, ageing and bottling facilities) as well as the remaining portfolio of Canadian whisky brands owned by Constellation, which include Black Velvet, MacNaughton, McMasters, and the international business of the Schenley brands – Golden Wedding and OFC.

Constellation Brands president and chief executive officer, Bill Newlands, said: “We are relentlessly focused on the consumer and building a portfolio of brands consumers love today, while pushing beyond to meet their evolving needs well into the future.

“This decision aligns with our consumer-led premiumisation strategy to deliver accelerated growth and shareholder value as we continue to focus our wine and spirits portfolio on higher-end, fast-growing brands.

“For Heaven Hill, Black Velvet is a historic, well-known, and high-volume brand that complements their broad distilled spirits portfolio and aligns with their business strategy.”

Subject to regulatory approval, the sale is expected to complete in the second half of 2019. Constellation stated that net sales for Black Velvet and the other whisky brands included in the deal amounted to US$67m in the fiscal year 2019.

Max L. Shapira, president of Heaven Hill Brands, added: “We are excited to add Black Velvet to our iconic group of brands and look forward to growing this historic brand in the months and years ahead.

“As we continue to build our business based on strategic acquisitions and innovation, Heaven Hill’s commitment to quality continues to steer the positive outlook for our diverse portfolio.”

The Black Velvet brand was developed in 1946 and was first sold in 1951.

The sale follows a number minority investments made via Constellation’s venture capital division. These include Austin Cocktails, Bardstown Bourbon Company, El Silencio, The Real McCoy, and most recently Montanya Distillers, a deal which forms part of its Focus on Female Founders campaign.

In June it was reported that strong sales of Constellation’s beer brands Corona and Modelo had led the company to adjust its earnings forecast for 2020, with share prices rising as a result. In May, however, it was announced that the vast US$1.7 billion deal between Constellation Brands and E&J Gallo was to be delayed following a request for additional information and documentary material from the US Federal Trade Commission.

Back in April, Constellation had announced its intention to sell its wine brands priced at US$11 a bottle and below, including Clos du Bois, Black Box, Estancia, Mark West, Wild Horse, Franciscan, and Ravenswood, to E&J Gallo.