Constellation to buy Mondavi

November 1, 2004
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Constellation to buy Mondavi

Constellation Brands has announced it plans to acquire Robert Mondavi Corp. for $1.36 billion. The deal puts an end to Mondavi’s previously announced intention to sell its high-end wine labels and focus on “lifestyle brands.”
Constellation Chairman and Chief Executive Officer Richard Sands told The Wall Street Journal the proposed sale of luxury brands such as Opus One and Robert Mondavi Select prompted Constellation’s interest in the acquisition because it would put the Mondavi name in the hands of two separate companies. “They lose control of the prestige, the halo-effect business, which shines a bright light on the lifestyle business,” he said.
The merger drew early praise from Citigroup analyst Bonnie Herzog, who wrote, “We believe this acquisition makes sense for Constellation and provides the company with some very strong wine brands. Even though we were originally expecting Constellation to go for the luxury wine business only, an acquisition of the entire company makes sense since it also gives Constellation the Woodbridge brand, which fills in a hole for the company in the $5-$8 price category.
“In addition, we believe Constel-lation will be able to grow some of Mondavi’s smaller, luxury brands through its massive distribution system.” BI
Molson, Coors entice shareholders
Molson Inc., Montreal, and Coors Brewing Co., Golden, Colo., have changed their proposed merger agreement to make the deal more agreeable to Molson shareholders. A special dividend will be paid to shareholders, excluding those owned by Pentland Securities, which is owned by Eric and Stephen Molson. Approximately $316 million will be paid out to shareholders just prior to the closing of the merger.
“Both Coors and Molson agree that the merger is the best alternative for both companies, and are confident that the merged company can create greater levels of sustained shareholder value,” the companies said in a statement. “Today’s action provides immediate value to Molson shareholders while still enabling them to participate in a significant long-term upside of the combination.” BI
Coca-Cola settles EU dispute
The Coca-Cola Co. has resolved a five-year antitrust dispute with the European Union by ending retailer discounting practices and agreeing to share shelf space with competitors. According to reports, the company avoided a fine and further legal arguments by settling the case, allowing it to focus on improving slow sales in Europe.
PepsiCo had complained to EU regulators about Coca-Cola’s sales and marketing practices, prompting the antitrust case. According to industry estimates, Coca-Cola holds 50 percent of Europe’s carbonated soft drink market, while PepsiCo holds less than 10 percent. Coca-Cola will be allowed to maintain some of its exclusivity agreements in the foodservice channel for two years. The settlement will be effective for five years, and Coca-Cola bottlers are expected to be in line by the beginning of 2006. BI
Citrus industry copes with hurricane damage
This year’s hurricane season has left Florida’s orange and grapefruit juice companies with higher costs. Orange crops were lost to wind and floods, and an estimated 65 percent of the Florida grapefruit crop was lost.
As a result of the damage, PepsiCo’s Tropicana Products Inc. announced it will raise wholesale orange juice prices 3 to 5 percent, and grapefruit prices 24 percent. Coca-Cola’s Minute Maid division at presstime had not announced price increases, and said it was monitoring the situation.
The Florida Department of Citrus said it will spend $3 million to promote orange juice, despite the shortage. The group is attempting to boost consumption, which has fallen about 1.6 percent since 2001, according to reports. A series of national television commercials will promote the health benefits of orange juice, particularly during cold and flu season. BI
Fiji Water honored with corporate excellence award
Fiji Water recently received the Secretary of State’s 2004 Award for Corporate Excellence. Company founder David Gilmour accepted the award, which recognizes U.S. firms for outstanding corporate citizenship, innovation and business practices, from U.S. Secretary of State Colin Powell at a ceremony in Washington, D.C.
“For nearly a decade, this company has done a lot more than bottle water in the South Pacific. Fiji Water has reached out to communities all around the island and helped them to meet their most important social needs,” Powell said.
Accepting the award, Gilmour said, “[The award] acknowledges the introduction of a sustainable new industry to Fiji, involving the world’s most precious commodity, water. There would be no life on Earth without it, and this commodity, which replenishes itself, is unusual as a commodity because it will never be depleted so long as it is properly managed.”
In addition to creating a sustainable business, Fiji identified early childhood education as a priority for Fiji, and to date, has built five kindergartens in neighboring villages, helped local teachers earn certification, established a trust for capital improvements at the village level, and has created education and scholarship programs in Fiji. BI
Little Green Book
In the newly released The Little Green Marketing Book, author Tim McMahon has compiled dozens of marketing lessons told through real-life stories to help marketers stay focused on the things that matter.
Included in the book are:
• Five “Keep It Simple, Stupid” marketing rules to live by
• Three reasons your business       should consider selling by phone
• 10 reasons new products fail
• 10 reasons new products succeed
• Must-have guidelines for successful sponsorships
• 11 things (6 short-term; 5 long term) to do when you find yourself caught off trend
• How to turn a million-mile claim into a million dollars of publicity
• Why you have to have a plan; why you may have to adjust it; and how it will keep you ahead of the game
• What every marketing student needs to know
• How to plan the best meeting ever Robert L. Dilenschneider, founder and chief executive officer of The Dilenschneider Group Inc., a global communications consulting firm in New York, says of the book, “No matter what your title or what field you are in this is must reading if you want to move ahead. McMahon makes the complex marketing puzzle simple and provides easy-to-understand lessons that you can take to heart or share with your colleagues. This book should be read by all in your organization.” And Bob Messenger, publisher of the Morning Cup, has said, “You are going to treasure this little book. It’s like a pair of jumper cables with the power to quick-start your creative juices. It will stimulate idea-generation and be a conduit for innovative thinking.”
The book is published by Spring Rain Publishing, New York City, and sells for $12.95. For a copy, contact tim@getandkeep.biz. BI

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