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A well-aged wine empire

The Sands brothers have turned Constellation into a global powerhouse

Canandaigua Industries Co. began as a small bulk-wine producer with eight employees. Today it’s Constellation Brands Inc., an international enterprise producing wine, beer and spirits with sales in 125 countries and operations at 40 facilities worldwide. Constellation employs 4,300, including 620 locally.
 
Started in Canandaigua in 1945 by Marvin Sands, the business became Canandaigua Wine Co. in the early 1970s and Constellation Brands in 2000. Under Marvin’s sons, Richard and Robert Sands, the business has seen spectacular growth.
 
Richard joined the company in 1979. He was named president and chief operating officer in 1986 and CEO in 1992. He led the company’s growth from sales of $175 million in the early 1990s to more than $5.2 billion in fiscal 2007.

Richard handed the CEO reins to his brother in 2007, though he continues as chairman. Robert joined Constellation Brands in 1986 as general counsel; he has held various management positions as well as a seat on the company’s board of directors.
 
The brothers attribute the company’s success to the business model established early by Marvin, who died in 1999. Constellation has grown organically as well as through acquisitions.
 
Its products include wines by Robert Mondavi, Clos du Bois, Kim Crawford, Inniskillin, Franciscan Estate, Ruffino, Simi and Estancia, as well as Black Velvet Canadian Whiskey, Svedka Vodka and Corona Extra beers.
 
The company first expanded outside the wine market in the early 1990s when it acquired Barton Beers Ltd., a major producer of distilled spirits and marketer of imported beer.
 
In 1998, Constellation bought the spirits brand Black Velvet and extended its geographic reach by acquiring Matthew Clark, an independent United Kingdom wholesaler and wine company. A year later, the company entered the fine wine category by acquiring Simi and Icon Estates, formerly Franciscan Estates.
 
In 2001, Constellation bought Ravenswood and formed a joint venture with BRL Hardy, a major Australian wine producer. Constellation acquired BRL Hardy in 2003 and the Robert Mondavi Corp. in 2004. Then came the addition of Vincor International, a leading wine producer in Canada.
 
"I’m very proud that (during my tenure as CEO) we followed our growth strategy and built a global beer, wine and spirits business," Richard Sands said.
 
When Robert became CEO, the business shifted its focus to growing its brand of premium products and streamlining operations.
 
"(Our goal over the past few years has been) driving growth through profitability," Robert said.
 
Constellation divested its Australian and United Kingdom wine businesses in 2010, and now concentrates on selling its premium wines and spirits in the United States, Canada and New Zealand.
 
This year, the company announced it would spend $1.85 billion to purchase the remaining 50 percent stake in Crown Imports LLC, a joint venture formed in 2007 with Grupo Modelo S.A. de C.V., whose flagship brand is Corona Extra. The deal will give Constellation total control over the U.S. distribution of Corona, the country’s top imported beer.
 
"We believe this is a positive move for Constellation," said Ken Perkins, an analyst with Morningstar Inc. "Concerns that (Constellation might) lose Crown Imports’ large profit contributions may now be put to rest."
 
Investors have cheered the company’s latest moves: Its stock is up some 50 percent since the beginning of the year. Since the early 1990s, Constellation’s share price has appreciated roughly 1,800 percent.
 
The Sands brothers expect Constellation Brands to continue to grow.
 
Complementing their professional success is the Sandses’ commitment to philanthropy in the Rochester community and other regions where Constellation does business. Faithful to the mindset established by Marvin Sands, the company emphasizes environmental sustainability and social responsibility.
 
Richard and Robert Sands said they have a soft spot for the Rochester region, where they grew up and remain rooted professionally and personally.
 
"We are raising our families here," Robert Sands said. "Companies that just end up here or bring in a hired management team don’t have the same sense of community that we do."
 
10/12/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

 

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