Constellation Brands takes a minority stake in Black-owned La Fete du Rosé

Dive Brief:

• The venture capital arm of Constellation Brands will take a minority stake in La Fete du Rosé as part of its Focus on Minority Founders initiative, the company announced this week. This initiative aims to give $100 million to Black, Latinx, and minority-owned businesses by 2030. Terms of the deal were not specified, but La Fete’s CEO Donae Burston told CNBC the funds will be used to expand staff and production. 
• The 2-year-old Black-owned brand focuses on targeting consumers that are normally looked over, and donating profits to help more BIPOC get into the wine and spirits industry. This new deal will allow the rosé brand to reach more customers, while Constellation will have the opportunity to work with untapped markets.​
• ​​In recent years, incubators, mentorships and other methods have helped CPG’s cultivate diverse talent while attempting to level the playing field by providing funding and access to sales, marketing, operations and finance expertise. ​​​​

Dive Insight:

Following a year of racial strife, CPG companies are adopting strategies and marketing campaigns built on unity and inclusivity, while making deals to diversify their portfolio.  

What Constellation gets with its stake in La Fete du Rosé is a company founded by a 15-year veteran of the alcohol space. Burston worked for brands like Dom Perignon, Veuve Clicquot, Ruinart and Moet & Chandon, as reported by CNN, before launching the brand in 2019. The rosé company aims to expand its customer base past the widely accepted (and targeted) affluent, college-educated white woman through its advertising and price at $25 a bottle. The business also gives back to the community by donating some of the company’s profit to programs that allow BIPOC children from low-income backgrounds to travel internationally and learn leadership skills.

With most CPGs still in planning and early execution mode, financial results of these investment deals and initiatives to support minority-owned businesses and employees will be measured in the long term. PepsiCo, for example, pledged $400 million last year to increase representation of Black Americans in the company.

In the short term, companies can fill voids in up and coming markets while they wait and see if the investments have impact. In 2019, Jay Z’s Marcy Venture Partners led a $1 million investment round in Black-owned Partake Foods, the maker of allergen-free cookies. 

In the past, Constellation Brands has helped underrepresented founders in the alcohol space. In 2018, the company pledged $100 million to woman-led alcohol brands by 2028. Since the launch of the Focus on Female Founders initiative, the number of female-owned brands in Constellations portfolio has gone from 20% to 50%. 

CPGs have learned emerging brands can be an entree for older companies to work with a more representative set of owners and entrepreneurs. Chobani launched an incubator program that has an added focus on diversity, and a majority of the startups from its 2019 class were either women-owned or minority-led. And earlier this year, Molson Coors invested in a brewery formed by former gang members that are trying to help end street violence.