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Diageo Sells 19 Brands To Sazerac In $550-Million Deal

November 12, 2018

Diageo has offloaded a slew of non-core brands to Sazerac in a transaction worth $550 million. The U.S. volume of the brands in question was 2.9 million cases last year, down 7.5%, according to Impact Databank. Still, Diageo told SND that the deal will reduce its U.S. market share by less than 50 basis points.

The brands moving to Sazerac include: Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Myers’s, Parrot Bay, Romana Sambuca, Popov, Yukon Jack, Goldschlager, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole, Booth’s and John Begg.

Diageo says the proceeds from the deal, which is expected to close in early 2019, will be returned to shareholders through a share repurchase. Diageo CEO Ivan Menezes said, “The disposal of these brands enables us to have even greater focus on the faster-growing premium-and-above brands in the U.S. spirits portfolio.”

According to Impact Databank, Diageo’s total U.S. volume was up 0.5% to 40.6 million cases last year, with the company ranking first among all spirits marketers by a wide margin. Sazerac ranked second at 26.2 million cases, up 2%, followed by Beam Suntory, up 1.5% to 22.2 million cases.

Diageo has agreed to enter into long-term supply contracts with Sazerac for five of the brands each for a period of 10 years. Supply of all other brands will transition to Sazerac within a one-year period from completion of the deal.

Sazerac chief operating officer Jake Wenz said the company plans to “provide the focus to maximize the full global potential of the brands” acquired in the deal.—Daniel Marsteller

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