Considering Modelo does over $10 billion in just the US, I think Constellation will be just fine.
I remember when Treasury dumped like $130 million worth of stuff down the drain (largely overrun Aussie stuff and some Beringer crap), and people were freaking out.
No freaking out - just a sign of the times . . . and I expect to see more of this over the next 12-18 months - at least
Cheers
cull the herd, too much bloat, far too many meaningless brands are being kept alive that should have had their funeral years ago
I saw this yesterday, and highly disagree with his assumptions. There is still plenty of money and plenty of ambitious people in Napa. The question is what would these have sold for in better times? My answer is easily more than these prices, so this was just some smart buying by someone with a ton of money.
https://www.wine-searcher.com/m/2024/08/bankruptcy-proves-appeal-of-california-wine
Agree with your sentiments wholeheartedly. That’s why Vintage purchased them in the first place - they got deals on them knowing what they ‘could be’. But is this a sign of ‘strength’? No - and anytime Bill Foley is involved, you know there are ‘deals’ - he’s a very astute businessman and, as far as I’ve seen, had never paid ‘full price’ for the brands/vineyards/wineries he’s purchased.
Cheers
I got the feeling he paid full price for Ferrari Carano
Laetitia and especially Qupe are long time go-to BTG wines at restaurants, Girard as well to a lesser extent.
That was 20+ years ago.
A goodwill write-down wouldn’t bankrupt anyone. It’s just a reduction in the book value of assets, not a cash loss. It’s like your house losing value in 2007-08 – it’s just a loss on paper if you don’t sell.
The company didn’t disclose details in its press release, but it probably reflects the declining value of some of its brands.
Presume details will come out when their next 10Q.
I would assume the write down is on inventory on hand and in distributors we will see.
Many of the wines that are down 10%+ are in the value segment and can be MV and have perishable or best by from operations that need to be maintained like Mondavi PS and Woodbridge. Same for Vodka flavors that Svedka puts out then don’t get picked up or get discontinued by retailers in 1 cycle.
Not following. Was 20 years ago?
Those haven’t been widely used BTG options for 20 years is what I meant. Maybe in some parts of CA.
From what I see definitely for Laetitia and Girard at restaurants, but I still see them in stores. Qupe syrah is still a big go-to, at least in lots of local restaurants. One of them easily selling multiple cases per day.
Which restaurant and where? That’s a crazy amount of wine - unless they are giving it away . . .
Cheers
Brophy’s in Santa Barbara. They probably sell just as much Meomi.
I doubt that. Given the amount, I think this has to be a writedown of intangible assets (e.g., goodwill) such as brands. Given the constant turnover of inventory, it’s hard to imagine that they were carrying wine on their books at values that much in excess of the market value.
They’ve made oodles of acquisitions over the years, and those wineries and brands would be recorded on the balance sheet at the price paid, less any depreciation. Some of that would reflect tangible assets (e.g., inventory, buildings, accounts receivable). The rest would be booked as goodwill. It’s very common for acquisitive companies to (a) overpay and then (b) write down the value a few years later.
Nearly in my backyard - wondering if they’re selling as much anymore . . .
Cheers
