Diageo Aims to Cull Liquor Brands -- WSJ

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 [e-mail]

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May 25, 2018 02:47 ET (06:47 GMT)

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