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1 2 6 V I N E YA R D & W I N E RY M A N A G E M E N T | J u l y - A u g 2 016 w w w. v w m m e d i a . c o m END POST TYLER COLMAN e all like shopping for wine. But Con- stellation Brands, the mega drinks cor- poration with a $31 billion market capitaliza- tion, has been adding brands to its virtual shopping cart at a scale that befits only a company of its size. In 2012, the group bought Mark West Wines. Last year, it bought Meiomi from then-33-year-old Joe Wagner for $310 million. And this April, the company bought The Pris- oner wine and associated labels for $285 million from Agustin Huneeus (who, coincidentally, sold Franciscan to the company back in 1999). Huneeus Vintners bought The Pris- oner for $40 million in 2010; volume reached 175,000 cases, with 30% growth at the time of the Constella- tion purchase, according to the press release at that time. The Prisoner is considered "super luxury," since it sells for about $45 per bottle. This mergers and acquisitions activity is reminiscent of the late 1990s tech boom, when every half- baked startup aimed to be bought out by Microsoft. Is the game in some quarters now to start a wine brand with purchased fruit and a cute label only to sell it to Constellation a few years hence? The acquisitions thus far seem to be working out for all involved: Con- stellation revenues have grown and the shares are up 28% over the past year, while the S&P 500 has declined by 1%. (Although the company oper- ates 19 wineries, it also has sizable beer and spirits holdings.) In an investor call at the time of The Prisoner acquisition, Rob Sands, ies with estate fruit; they're brands where the volume of production can be rapidly expanded and the costs of production reduced through econo- mies of scale. Indeed, even in the press release about the acquisition, Constellation talked up its other fruit sources for the brand. Buying a hot wine brand may seem sexy, but it has big risks, too. Today's Prisoner or Meiomi is tomor- row's Blackstone or Conundrum. Every dog — or wallaby — has its day. And with no land in the pur- chase, the new owner is left with one really big endcap of red blend. Even an artsy label, which I assume is part of the appeal of The Prisoner, is eva- nescent. Remember all those Grate- ful Palate imports from Australia with the fun labels? Me, too. Meanwhile, there are small wine- makers scoping out granitic vineyard sites in the Sierra Foothills or clay loam over shale in Santa Barbara with maritime influences from fog and wind. They have good stories to tell, ones that don't rely on art labels or blends but rather on hard work on a human scale that's tied to the land. They're not trying to be the next The Prisoner; they're trying to be the next Jamet, Chave, Clos Rougeard, Mug- nier or Ridge. And that sounds a lot more interesting to me. But, then again, I'm not a $31 billion wine con- glomerate. Tyler Colman, author of the wine blog Dr. Vino, teaches wine class- es at New York University and the University of Chicago, and wrote t h e b o o k " W i n e P o l i t i c s : H o w Governments, Environmentalists, Mobsters, and Critics Influence the Wines We Drink." Comments? Please e-mail us at feedback@vwmmedia.com. (Opinions expressed in this column do not necessarily reflect those of Vineyard & Winery Management.) Brand Without Land Constellation CEO, underscored the company's "premiumization strat- egy," commenting that "all the big growth in wine is in higher price points like The Prisoner." How times have changed. In the wake of the recession, the average wine price plummeted, but volumes still inched higher. Americans kept drinking enough wine to ensure the per capita consumption rate climbed every year, with the current streak at 22 years of consecutive growth. It is, arguably, the longest intact bull mar- ket in America. This is a good thing: Americans, for centuries lagging behind Europeans in wine con- sumption, are now seeing wine as having an impor- tant place at the table. But what kind of wine? Is it $45 bottles of The Prisoner? Hardly. The mar- ket for wine has been bifurcated. On the one hand, the average spent on wine is $9.69 at grocery stores (and $12 at liquor stores), accord- ing to Nielsen. On the other hand, investment-grade wines have been surging as Burgundy prices leap higher and higher, and Bordeaux first growths can easily top $500 per bot- tle on release. The Prisoner falls in a middle ground of "luxury" — mass aspira- tional. They're the Starbucks of the wine world. Sure, you could have a coffee for half the price, but you also could have a coffee for double the price. They're impactful in their inten- sity, reassuring in their consistency, yet derided by connoisseurs. Maybe now that these wine brands are thor- oughly corporatized, they'll have loy- alty programs, too? One thing about these labels is certain: They aren't traditional winer-