Diageo to further offload wine business

Diageo is putting its Chalone Vineyard winery up for sale after it was left out of last week’s £361 million deal with Treasury Wine Estates.

Chalone Vineyard was turned down by Treasury because the company already sells plenty of Chardonnay (Photo: Wiki)

Treasury reportedly turned down the offer to buy Chalone from Diageo – instead opting to buy its Sterling, Beaulieu and Blossom Hill brands – because it already produces plenty of Chardonnay wines.

Diageo has so far declined to comment publicly on Chalone Vineyard, with media reports quoting unnamed company spokespeople confirming the sale. It is unclear what price Diageo is looking to achieve with the sale.

Diageo purchased the Californian winery for $260 million (£170m) in 2004, when current CEO Ivan Menezes led the company’s operations in North America. It’s sales went from 30,000 cases to 200,000 cases just a matter of years, but in 2014 they stood at 166,000 cases, down 15%.

The Chalone vineyard produces several red and white varieties, and is the sole winery in its own Chalone AVA (American Viticultrual Area).

Diageo has made a distinct move away from wine with its large-scale sell-off to Treasury Wine Estates, which is looking to premiumise its US wine production.

Commenting on the Treasury deal, Menezes said: “Diageo’s strategy is to drive stronger, sustained performance through focus on our core portfolio,” and the wine sale “is another element of that strategy in action.

“Wine is no longer core to Diageo and this sale gives us greater focus,” he said.