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Diageo loses its love of wine amid sale rumours

Alcohol giants Diageo, owners of Jonnie Walker and Ciroc vodka are looking to offload their wine division.

“Diageo fell out of love with wine following the great recession of 2008-09 when it saw that the category could not offer the returns it was looking for,” Jeremy Cunninton, senior Alcoholic Drinks Analyst at Euromonitor International.

Brands including Blossom Hill and Piat d’Or will likely be sold off to Australian wine maker Treasury Wine Estates.

The deal for Diageo to sign with Treasury has not be confirmed as of yet but if Diageo signs that dotted line they will join Treasury wine brands Penfolds, Wolf Blass, Lindermans and Matua.

“The main benefit for the buyer (Treasury Wine Estates) will be Diageo’s US wine assets with the premium and brands such as Sterling Vineyards, which will greatly improve Treasury Wine Estates generally low value US portfolio” Cunninton said.

The CEO of Diageo has been under some pressure to offload the wine sector of the company, as it is estimated to only make up around five per cent of the global revenues.

“The fact there is a sale now may in part be due to some pressure to sell, but it is more likely there was someone willing/able to offer a suitable price,” Cunninton said.

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