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It's amazing people don't realize that... it's kind of this little secret here in our own backyard.

Constellation Brands goes local

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Pop quiz: Where's the headquarters of the world's largest wine company?
No, not Bordeaux. Not Napa, either.

Until last week, the correct answer would've been Victor, N.Y., just south of Rochester, and the company would've been Constellation Brands. But now the AP is reporting that E. & J. Gallo Winery of Modesto, Calif. holds that distinction.

That's after Constellation sold off the bulk of its money-losing Australian, British and South African holdings for $230 million.

Right as the evolving wine giant was pulling back abroad, The Innovation Trail's Zack Steward took a look at Constellation's growing place role in the local Finger Lakes wine economy.

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December in the Finger Lakes is — newsflash — quite cold. Not the best time to be hanging out in a vineyard.
But every year workers brave the icy temps to haul out buckets of frozen grapes. It’s how you make ice wine.

“Which can only be made in places where it freezes. So every time you get really upset at our weather here, go, no, it’s good.”

Holly Howell is a wine columnist for the Rochester Democrat and Chronicle, and something of a booster for local wines.

She’s says a bumper crop of awards and high marks for local Rieslings in 2010 has really put the Finger Lakes on the map.

And while many wineries are starting to emerge on the scene with small batches of distinctive whites, the most successful wine company in the region has taken a different approach.

Howell says Constellation Brands may be one of the most under-the-radar Fortune 1000 companies around. “And it’s amazing people don’t realize that they are the largest wine distributor in the world. And it’s kind of this little secret here in our own backyard.”

“We’ve been kind of a quiet company for a number of years. And right now we really want to change that, “ says Lou Applebaum, vice president of strategy and business development at Constellation.

The company has deep roots in the region. In 1945 when Marvin Sands founded Canandaigua Industries, the company began making bulk wine in a former sauerkraut factory.

More than 60 years later, the Sands family still controls the company, guiding it through a maze of acquisitions to make it the world’s largest winemaker, in terms of both production and distribution.

But after a few of years of flat sales, the company is refocusing its strategy.

Constellation came to a deal right before Christmas), selling off virtually all of its Australian, British and South African brands for $230 million.

Mike Veseth is a professor the University of Puget Sound in Washington and writes the Wine Economist blog.
He says the sale was probably a good move for Constellation, and that you can look at it two ways. One is pulling back. And the other is, “making a decision to go more forcefully in the direction that they have set out.”

But the company, which still holds around 100 brands from all over the world, doesn’t represent any wineries from the Finger Lakes region.

That doesn’t surprise Jim Trezise, president of the New York Wine and Grape Foundation.  He says, “I wouldn’t expect them to do more than they are now unless it’s in their self-interest, and if they find something that they say ok really we’re going to build a Finger Lakes brand from start because it’s good for our bottom line then terrific.”

While Constellation doesn’t distribute a regional brand, it’s still a major force in the local wine industry.  Its purchases of bulk grapes from local growers are part of the reason why the Finger Lakes accounts for 85 percent of the state’s wine production.

The Wine and Grape Association’s Jim Tresize says, “They say a rise in tide lifts all boats. So if a company is growing and the wine market is growing and awareness of wine is growing, then it really basically is very good for everybody.”

Constellation wants to raise the tide even further after some choppy years.  As it scales back abroad, Constellation’s Lou Applebaum says the company is investing in upstate New York. The company recently shelled out $7 million dollars to expand its production facility in Canandaigua.

But Applebaum says that’s not where the company sees its future.

That’s with the so called “premium” wines of California brands like Clos du Bois and Robert Mondavi.
He’s says for now the focus for the company is on owning the $5 to $15 dollar-a-bottle market.

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