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.