Constellation Wines cuts 350 jobs as part of Australian restructure

Posted by Isobel Drake on 8th August 2008

Constellation Brands, Inc., a leading international beverage alcohol producer and marketer, has announced that Constellation Wines Australia (formerly Hardy Wine Company) will sell certain assets and implement changes to its wine portfolio and production footprint. The changes are being made to “simplify the business and provide better focus on premium brands and operational efficiencies aimed at increasing long- term profitable growth and improved returns”.

Constellation plan to sell three of their 10 production facilities, in addition to the sale of more than 20 vineyard properties; consolidation of bottling operations; portfolio streamlining and rationalisation of more than 30 percent of the company’s Australian stock keeping units (SKUs). The company’s Australian employment will be impacted by more than 20 per cent, with about 350 jobs to be lost.

“This project is part of our ongoing efforts to enhance operating efficiencies, improve cash flow and return on invested capital (ROIC) and reduce existing borrowings,” claimed Rob Sands, Constellation Brands president and chief executive officer. “Australia remains one of the most important and dynamic New World Wine producing markets, and our Hardys and Banrock Station brands are two of the most recognized and consumed wines in the world.”

“Australia is the largest New World Wine exporter based on volume and value, as well as being the second largest producer, and it is the third largest consumer market for these types of wines,” Mr Sands added. “This assessment of our Australian business has led to the development and implementation of an action plan that we believe will allow us to better position this business for success around the world. We will continue to provide consumers with an excellent array of the highest quality, premium Australian wine brands, along with many other high-quality Australian products that are Constellation Wines Australia hallmarks.”

Bob Ryder, Constellation Brands chief financial officer said the focus of the company was on brand-building and the restructure was necessary to complete such a task. “We are eliminating less profitable SKUs, focusing on brand-building and increasing pricing to restore appropriate levels of profitability,” he advised. “We are also monetizing certain elements of our production footprint and increasing efficiencies.”

The restructure follows the completion of a strategic review of the company’s Australian business.