Gary Vaynerchuk sells his Empathy Wines business to Corona owner Constellation Brands
Corona beer owner Constellation Brands has acquired Empathy Wines, the direct-to-consumer wine brand co-founded by ad agency executive Gary Vaynerchuk. Financial terms were not disclosed.
The brand, founded in 2019, is priced at about $20 per bottle and has sold 15,000 cases and acquired more than 2,000 subscription customers to date, according to Constellation, whose wine and spirits holdings include Kim Crawford, Robert Mondavi, Ruffino and Svedka vodka. The company plans to scale Empathy’s d-to-c and digital expertise across its wine and spirits portfolio. E-commerce is a small but growing channel in the alcohol industry that has gained momentum during the pandemic as more consumers order in instead of going to bars and restaurants.
Empathy Wines co-founders Jon Troutman and Nate Scherotter will join Constellation, while Vaynerchuk will be tapped for a consulting role.
“Our ability to understand and ‘empathize’ with the modern-day wine consumer’s behavior, wants, and needs has been proven through Empathy’s incredible growth,” Vaynerchuk said in a statement. “We are excited to replicate this modern-day, consumer-centric approach at a larger scale, and with more infrastructure, working with a portfolio of some of the most iconic brands in the world of wine, and with leadership that is making investments in a quickly evolving category.”
Constellation president and CEO Bill Newlands said in a statement: “We believe Empathy Wines has the right team and approach to help us deliver exceptional brands and experiences to our consumers, and thereby industry-leading growth, by expediting our ability to more deeply connect with consumers and build the strongest direct-to-consumer and digital commerce business in the category.”
Vaynerchuk’s agency, VaynerMedia, works for Constellation competitor Anheuser-Busch InBev. While AB InBev is primarily a beer company, it has grown beyond beer in recent years with holdings including Babe Wine. Asked about potential conflicts, a Constellation Brands representative stated that “this acquisition and partnership is strictly between Constellation Brands and Empathy Wines. Gary Vaynerchuk will work with Constellation as an independent strategic advisor focused on our direct-to-consumer (DTC) and digital commerce business.”
A representative for AB InBev did not immediately respond to a request for comment. A VaynerMedia spokeswoman in an email stated that the agency will not be involved with the Empathy-Constellation arrangement, “so no concerns about conflict with ABI.”
Vaynerchuk, who immigrated to the U.S. from Belarus in 1978, launched his business career by transitioning his father’s liquor store into an e-commerce platform that he renamed the “Wine Library.”
Constellation announced the acquisition on the same day as releasing its financial results for the quarter ending May 31. It reported a net loss of $177.9 million. Adjusted earnings-per-share came in at $2.30, which surpassed analyst expectations, according to the Associated Press.
The company’s beer business, which includes Modelo Especial, increased sales to retailers by 5.6 percent, with strong sales in stores that “more than offset the impact of the 75 percent reduction in the on-premise channel due to COVID-19 related shut-downs,” it reported. Sales-to-retailers for Constellations’s wine and spirits business fell 1.1 percent, but the company reported that its so-called “power brands” grew 5 percent, driven by Kim Crawford, Meiomi, Svedka, The Prisoner Brand Family and Woodbridge by Robert Mondavi.