Diageo has agreed to sell 19 spirits brands including Goldschlager cinnamon schnapps and Popov vodka to US-based Sazerac for $550mn
The world’s largest distiller says that the deal will allow it to focus on developing its fast-growing premium drinks portfolio in the US.
North America is one of the biggest markets for premium drinks in the world, accounting for around a third of Diageo’s sales and almost half its operating profit.
The British spirits company expects that the offloading of these brands will generate a one-time gain of around £110mn (USD$141mn).
Diageo, which is known for brands such as Tanqueray and Captain Morgan, says it has also agreed to enter long-term supply agreements with Sazerac on completion for five of the brands each for a period of ten years.
Meanwhile, the supply of all other brands will transition to Sazerac within a year following completion.
“Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders,” said Ivan Menezes, Chief Executive of Diageo.
“This includes a disciplined approach to allocating resources and capital to ensure we maximise returns over time. Today’s announcement is another example of this strategy in action.
“The disposal of these brands enables us to have even greater focus on the faster-growing premium and above brands in the US spirits portfolio.”