In an attempt to strengthen its brand portfolio, Constellation Brands Inc. (STZ) recently announced its plans to purchase the Casa Noble tequila brand, including the latter’s trademark and associated assets.
The global beverage alcohol company declared that its acquisition is anticipated to close in Sep 2014, with further terms of the contract remaining under covers.
Founded by David Ravandi, Carlos Hernandez and Jose Hermosillo, together with equity partner, Carlos Santana, Casa Noble is a premium quality tequila brand. The drink is prepared from organic blue agave, grown in Mexico. Casa Noble tequila includes various brands like Reposado, Casa Noble Crystal and Añejo.
Per DISCUS, the tequila category is developing consistently. Also, the superior quality of the tequila improved nearly 10% in 2013, in the U.S. market. This acquisition will highlight Constellation Brands’ first super premium spirits in its portfolio. Management believes that Casa Noble would complement the company’s other Mexican beer brands like Corona and Negra Modelo beers, perfectly and drive further growth.
On the other hand, Casa Noble is also likely to benefit from this transaction as Constellation Brands’ impressive portfolio and strong reputation will facilitate the former to solidify its foothold in the market and emerge as one of the leading premium tequila brands.
However, one of the founders of Casa Noble, Jose Hermosillo will join Constellation Brands’ to supervise Casa Noble’s operations and lead its development. Also, he will continue as Casa Noble’s senior-most brand ambassador.
Constellation Brands has made other acquisitions in the past as well, to enhance its portfolio. The company recently completed the acquisition of the Mark West wine brand from California-based Purple Wine Company, LLC. The acquisition included some grape supply contracts and wine inventories from three California labels, i.e. a California pinot noir, a Russian River reserve pinot noir and a Santa Lucia reserve pinot noir.
Moreover, in a bid to enhance its presence in the U.S. beer market, the company penned an agreement with Anheuser-Busch InBev (BUD) to acquire the remaining 50% stake of Crown Imports.
Constellation Brands is the largest wine company in the world and commands a dominant position in the premium wine segment in the U.S. The company is also a leading producer of wines in Canada and New Zealand. This provides a competitive edge to the Zacks Rank #2 (Buy) company and bolsters its well-established position in the market.
Other stocks looking attractive at current levels include Castle Brands Inc. (ROX), with a Zacks Rank #1 (Strong Buy) and Boston Beer Co. Inc. (SAM), with a Zacks Rank #2 (Buy).