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Gallo Deal Uncertainty Delaying Grape Purchases

Dan Grapes, Nuts & Grapes, Wine

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The sale between two major winemakers is keeping some grapes from being purchased. The $1.7 billion deal in which E&J Gallo Winery would buy 34 wine and spirit labels from Constellation Brands remains in limbo after being announced back in April. “The status, to my knowledge, is that it’s still under review by the Federal Trade Commission an there are obviously some mixed feelings about whether that would be good for the industry,” Allied Grape Growers President Jeff Bitter said. 

Although it’s a debated move among the industry, Bitter said he believes some good things could come from the purchase. “The thing I’ll say about the positive side of that transaction is that I have full confidence that Gallo will take those brands and do something exciting with them and build them and invest in them,” he said. “That could have a trickle-down effect. If you’re losing a big buyer and that’s of concern, that’s obvious, and everybody knows that but there is an upside that nobody is talking about.” 

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Whether it’s a positive or a negative for the industry, the fact that the deal is unfinished is affecting grape purchasing in the market. “The reality is that neither of those big buyers knows what the outcome will be and this could drag into and beyond harvest. It’s tough for them to make decisions on buying grapes and investing in supply when they don’t know if the sale will be authorized,” Bitter said. “And then you have others in the industry who are waiting to see how that develops because it could change how they position themselves in the market as well.”

Gallo Deal Uncertainty Delaying Grape Purchases
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Taylor Hillman

Taylor Hillman

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AgNet Media Operations Manager and Farm News Director for AgNet West.