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Report: Pernod Considers Offloading $500 Million Wine Unit

March 14, 2019

Pernod Ricard is reportedly eyeing a potential sale of its wine division, whose brands include Jacob’s Creek and Campo Viejo. Bloomberg reports that the wine division, which has annual sales of about $500 million, is the subject of preliminary discussions toward a sale, although the process is said to be at a very early stage. Pernod hasn’t commented on the report.

Pernod categorizes Australia-based Jacob’s Creek and Rioja’s Campo Viejo as part of its “strategic wines” unit, along with New Zealand’s Brancott Estate and Sonoma’s Kenwood label. Those brands—which total about 11.6 million cases globally according to Impact Databank—account for approximately 5% of Pernod’s sales. Jacob’s Creek is the largest at 6 million cases, down 11% last year. The four brands combined for an 8% net sales decline in the six months through December, although they grew by 2% in Pernod’s most recent fiscal year, ended last June, and the company expects a better performance over the coming months. Pernod’s Champagne labels Perrier-Jouët and Mumm are grouped separately, as part of the company’s “strategic international brands” portfolio.

Pernod’s wine stable has seen mixed results in the U.S. lately. Campo Viejo has been in growth mode, more than doubling in size over the past three years to reach 260,000 cases, according to Impact Databank, which recently named it a “Hot Brand” for 2018. The range is led by its Tempranillo, which accounts for about 40% of volume, but has also benefited from the recent launch of Cava Brut Reserva ($13) and Cava Brut Rosé ($20) offerings. Brancott, riding the New Zealand wine wave, has also expanded markedly since 2010, cresting 200,000 cases, although it slipped 3.8% last year.

Meanwhile, Jacob’s Creek has declined in the U.S. along with the rest of the entry-level Australia category, falling from nearly 900,000 cases in 2010 to just below 500,000 cases. Globally, Pernod has launched a new premiumization-focused strategy for Jacob’s Creek in the U.K., and recently noted that the brand continues to grow strongly in Asian markets like China and India.—Daniel Marsteller

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