Diageo Aims to Cull Liquor Brands -- WSJ
May 25 2018 - 3:02AM
Dow Jones News
By Saabira Chaudhuri
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 25, 2018).
LONDON -- Diageo PLC is shopping Canadian whisky Seagrams VO and
cinnamon schnapps Goldschlager among other brands as it looks to
pivot toward higher-growth products, according to people familiar
with the matter.
Myers's rum, Popov vodka and Romana sambuca are other
middle-market Diageo brands on the block, according to these
people, as the world's largest liquor maker focuses on pricier,
international offerings that are seeing strong demand.
Centerview Partners has been hired to sell the portfolio, which
could bring in proceeds of up to $1 billion, according to people
familiar with the situation.
The process kicked off only this week with the company hoping to
sell the brands in a single transaction, meaning likely buyers will
include private-equity firms, according to one of the people.
"We regularly review our portfolio to ensure we are maximizing
shareholder value," said a Diageo spokeswoman.
Diageo's shares closed up 1.4% in London trading on
Thursday.
Sky News reported on Diageo's move earlier in the day.
Diageo, which owns more than 200 brands, has been shuffling its
portfolio in recent years to shed low-growth assets and increase
its exposure to promising markets and categories.
In 2015, it sold Scottish hotel-and-golf resort Gleneagles Hotel
Ltd. and later in the year agreed to sell most of its wine
portfolio to Treasury Wine Estates Ltd. for $552 million.
Millennials, in particular, are drinking less alcohol but
spending more money per drink, according to executives, and Diageo
like other drinks companies has been trying to play to this
trend.
Last year it bought Casamigos, an upscale tequila brand
co-founded by actor George Clooney that increased its exposure to
the fast-growing tequila market. In 2015, it swapped its Bushmills
Irish whiskey brand for Don Julio, previously owned by Jose Cuervo,
and last year launched a pricier Irish whiskey brand called Roe
& Co.
In the U.S., the company's largest and most profitable market,
Diageo has focused on getting drinkers to trade up to high-end
variants of brands like Tanqueray gin and Johnnie Walker whisky. It
is also trying to buoy its vodka sales, which have flagged in the
face of competition from Fifth Generation Inc.-owned Tito's
Handmade vodka.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
May 25, 2018 02:47 ET (06:47 GMT)
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