Pernod Ricard mulls sale of wine brands

Pernod Ricard is said to be considering selling its wine division, which includes its largest wine brands, Campo Viejo and Jacob’s Creek.

Pernod Ricard’s CEO, Alexandre Ricard, forecasts future growth in 2019 for the company

A report published in Bloomberg this morning claimed the company was in “early discussions” on a potential sale of the $500 million unit, quoting sources “familiar with the matter”, who wished to remain anonymous.

Pernod Ricard reportedly told Bloomberg in an email they did not comment on speculation, adding that “The group was under no external pressure and has already mentioned several times that it intends to continue the dynamic management of its portfolio.”

However, speaking to db at a press briefing last month, CEO and chairman Alexandre Ricard revealed that he would continue to “dispose” of brands that “no longer fit” within the drinks giant’s portfolio, following the sale in January of Argentine wine brand Graffigna to Chile’s VSPT.

At the time, Ricard said the company was “committed” to growing value sales over volume sales. “Our wine volume sales are down by 8% due to our value focused strategy, which we’re not afraid of pursuing,” he said.

The company’s wine brands include Australian giant Jacob’s Creek from Barossa Valley, which was today named as the third most powerful wine brand in the Global Wine Brand Power Index compiled by Wine Intelligence. Other brands in the stable include Rioja brand Campo Viejo, New Zealand’s Brancott Estate, Stoneleigh and Church Road, boutique brand Ysios, and California brand Kenwood in Sonoma, which it bought in 2014.

In January Pernod Ricard announced it was selling its Graffigna, Colón and Santa Silvia wine brands to Chilean wine giant VSPT for an undisclosed sum, as part of the ongoing plan to strip back volume driven listings that focus on discounting.

The company’s Graffigna winery and vineyards at Pocito and Cañada Honda in San Juan and La Consulta in the Uco Valley in Mendoza were also included in the deal.

It follows the announcement in December that US-based hedge fund Elliott Management had taken a stake in the French company, although it berated the company for its “disappointing” track record in merger and acquisitions and underperformance.

Pernod is not the only large company divesting its wine brands – rival Diageo sold its wine business in 2016 to Treasury Wine Estates for £361 million, while last month group Constellation confirmed rumours that surface in October that it was offloading around 40% of its wine brands to concentrate on its higher priced power brands.

 

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