Diageo sells-off 19 brands

As part of a strategy announced last year to sell-off 19 of its underperforming regional lines in favour of concentrating on global brand giants such as Johnnie Walker and Smirnoff, Diageo has sold-off a number of brands including Goldschlager and Booth’s Gin to specialist spirits supplier Sazerac for an aggregate figure of £430 million (net £340 million after tax & transaction costs).

Sazerac, which traces its roots to the early 19th century, is an independent family-owned US company that’s home to brands such as Buffalo Trace bourbon and Southern Comfort.

The transaction, subject to regulatory approval, is expected to complete early in 2019. 

Among the brands thus sold are Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Goldschlager, Booth’s Gin, Parrot Bay and Myers’s rum, Romana Sambuca, Popov, Yukon Jack, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole and John Begg.

Most of these brands are in decline or not in production at all and the sale contract also commits Diageo to continue producing five of the brands being purchased by Sazerac for 10 years but neither party has confirmed which brands that will include. For the others, production will revert to Sazerac after a year.

“The disposal of these brands enables us to have even greater focus on the faster-growing premium and above brands in the US spirits portfolio,” commented Diageo Chief Executive Ivan Menezes. The US and Canada represents the world’s largest market for premium drinks, accounting for one-third of Diageo’s sales and almost half of its Operating Profit.

The sale is expected to generate an exceptional gain on disposal of approximately £110 million and the drinks giant had always wanted to sell off the 19 brands as a complete package.