Constellation Brands buys Austin Cocktails

US firm Constellation Brands has acquired the remaining stake in ready-to-drink (RTD) producer Austin Cocktails for an undisclosed sum.

Through the company’s corporate venture capital arm, Constellation Brands Ventures (CBV), the firm made its initial investment in Texas-based cocktail company Austin Cocktails in December 2018.

The move was part of Constellation’s plan to invest US$100 million in women-led alcohol businesses over the next 10 years as part of its new Focus on Female Founders programme.

Austin Cocktails was founded in 2012 by sisters Jill Burns and Kelly Gasink in Austin. The firm uses family recipes from their grandfather Fred to create RTD cocktails.

“Austin Cocktails and its co-founders, Jill and Kelly, are at the forefront of understanding market trends toward premiumisation,” said Mallika Monteiro, executive vice-president and chief growth, strategy and digital officer, Constellation Brands. “The quality of their drinks is unmatched in the ready-to-drink category.

“We’re thrilled to have Jill and Kelly join our team and to leverage Constellation Brand’s scale and reach to support the continued rapid growth of Austin Cocktails’ outstanding products.”

Austin Cocktails is currently distributed in 28 states and grew by 135% in depletions in 2021 as RTD trends continue to rise in popularity among consumers, the company said.

Austin Cocktails will join Constellation’s ‘Fine Wine and Craft Spirits’ division, sitting alongside brands such as High West whiskey.

Gasink added: “As female founders operating in an environment where women entrepreneurs are significantly under-funded, we feel a sense of tremendous accomplishment to have built Austin Cocktails and recognise the additional implications of our success.

“Constellation’s commitment to female founders is helping change the landscape of the industry and beyond.”

According to Pitchbook data cited by Constellation, female-founded firms accounted for only 2% of venture capital investments in 2021, which was the second consecutive year that the number of female-founded companies receiving funding decreased.

Full-year sales performance

The acquisition announcement came on the same day that Constellation Brands released its financial results for fiscal 2022.

The firm saw its total net sales rise by 2% to reach US$8.82 billion in the 12 months ending 28 February 2021, while operating income declined by 16% to US$2.33bn.

The company’s wine and spirits business saw its organic net sales rise by 9% to US$2.06bn. Operating income declined by 24% to US$470.7m.

Constellation highlighted that its Fine Wine and Craft Spirits portfolio increased sales by double digits, led by High West and The Prisoner wine brand.

For fiscal 2023, the group expects its wine and spirits business to decline by between 1% to 3% in net sales and grow by 4% to 6% in operating income.

The company said it had returned nearly US$2bn to shareholders in share repurchases and dividends during fiscal 2022.