The wine trade fears jobs will go at Constellation following the sale of most of its UK and Australian operations to private equity group Champ, expected to complete this month.

Australia-based Champ was likely to slash UK-based jobs in order to cut costs, warned Steve Barton, director of First Cape owner Brand Phoenix. Constellation currently employs 650 UK staff.

A senior industry source said the profitability of the business was hampered by its "hefty" infrastructure and lower-priced entry-level wine brands. Champ would therefore be likely to look for savings and cut staff.

"There are various bell-wethers in UK wine," said Barton. "First Quench's administration was a massive moment for the wine industry and this is another. Constellation has exited the UK. Gallo has re-trenched. Pernod Ricard has made statements about allowing its prices to go up. Foster's still hasn't made a decision but is looking to sell its wine division. That's the top four wine companies in the world. Look at their views towards the UK market."

Champ paid $230m for 80% of Constellation Wines Australia & Europe, in a deal that includes almost all of its Australian, British and South African brands, wineries and vineyards, as well as its 50% interest in wholesaler Matthew Clark.

In 2003, Constellation paid A$1.9bn for the BRL Hardy wine business alone.

"It's difficult to deliver on margin at the prices where the major retailers are selling wine," explained Gavin Partington of the Wine & Spirit Trade Organisation.