Diageo to buy Constellation’s Que. distillery

The makers of Black Velvet whisky are selling their Quebec distillery and consolidating their Canadian production in Alberta.

New York-based Constellation Spirits announced Tuesday that it will sell its Schenley Distillery and Bottling operation at Valleyfield, southwest of Montreal, to Diageo, another major player in the spirits, beer and wine business worldwide.

Terms of the deal weren’t disclosed, other than that the sale is subject to board approval at both companies and is expected to be complete next month.

“Constellation will eliminate excess capacity and consolidate its operations to maximize asset utilization, improve efficiencies, generate cash flow, enhance ROIC and reduce costs, while Diageo will add the capacity it needs for Canadian production of its brands,” said Andy Berk, CEO of Constellation’s imported beers and spirits unit, in a release. “This will be a ‘win’ for both companies.”

Production now done at the Valleyfield plant will move to Constellation’s only other Canadian facility, at Lethbridge, Alta. The Quebec plant’s 230-odd staff will become Diageo employees.

British firm Diageo, which owns brands worldwide such as Smirnoff, Guinness, Bailey’s and Johnnie Walker and makes Crown Royal whisky at Gimli, Man., already used the Valleyfield facility as a supplier for distilling and packaging several of its own brands.

“After reviewing a number of options, we
have determined that the possibility to purchase this facility was a great
opportunity and the best way forward to support the continuing growth of our
brands,” said Diageo Americas Supply president John Council in a separate release.

Constellation Spirits is a division of Constellation Brands, whose portfolio of wine, beer and spirits also includes the Ontario and B.C. vintners Jackson-Triggs as well as Corona beer, Robert Mondavi wines, Effen vodka and Ridgemont Reserve Kentucky bourbon.

Black Velvet has become one of the top selling Canadian whiskies in the U.S. since Constellation bought the brand in 1999, the company said.

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