Raise a glass, because wine may just get a little cheaper on a supermarket shelf near you. It’s all because of a mega-merger between two titans of grape-smashing.
E. & J. Gallo Winery finally completed an $810 million purchase from Constellation Brands Inc.
The deal was on hold as the FTC poured over the details. The government regulatory agency raised concerns about Gallo getting too much control of the sparkling wine, dessert wine and brandy markets. The parties agreed to strike those portions from the transaction which took the $1.7 billion deal down to a mere $800 million and some change.
Gallo is getting 30-plus labels at various price points, along with increased winemaking capacity. Constellation is getting a whole lot of money.
“The closing of this transaction represents our company’s long-term commitment to the wine industry,” said Ernest J. Gallo, the third-generation CEO.
Gallo, founded in 1933 by brothers Ernest and Julio Gallo, was the world’s largest wine producer even before the Constellation purchase. The business has made low-priced bottles throughout its history and ventured into premium regions starting in the 1980s.
Gallo will go from producing 26.9% of all U.S. wines to 30.3% after absorbing Clos du Bois, Ravenswood, Franciscan, Manischewitz and several other brands.
Wine experts say Gallo will only get better at crushing the affordable wine market, which could mean a wider selection of pretty good tasting wines at cheaper prices.
We’ll drink to that.