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Diageo selling-off Blossom Hill?

Drinks giant Diageo is reportedly considering offloading part of its wine division including Blossom Hill after being approached by interested buyers.

According to Sky News, Diageo has been approached by “unidentified third parties”, who are interested in the drinks company’s Blossom Hill and Sterling Vineyards brands though not, it appears, Diageo-owned wine merchant Justerini & Brooks.

It is also unclear whether any future sale would include the distribution rights to LVMH’s Champagnes Moët & Chandon and Dom Pérignon which Diageo holds.

The maker of Guinness, Smirnoff and Johnnie Walker recently saw a surprise fall in third-quarter sales last month as “tough conditions in the emerging markets and subdued consumer demand in some developed markets” caused problems for the company said new CEO Ivan Menezes.

Wine accounts for just 4% of Diageo’s group sales, which pales in comparison compared to its beer and spirits arms, but selling some of its wine business would mean off-loading brands that have been part of the company since former CEO Paul Walsh acquired them from Seagram in 2000 in a £5.5 billion joint bid with Pernod Ricard.

A source told Sky that despite the interest, no “formal decision” had been made and that any transaction would not happen for some time.

“They are assessing interest from parties who have made approaches for parts of the wine business, but If it doesn’t fit financial and other criteria, they will not feel compelled to sell,” said the source.

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