Diageo uncorks deal for wine group
Drinks group Diageo today said it was buying US wine group Chalone for about $260m (€194.4m).
The company, whose key brands include Guinness and Smirnoff vodka, said the acquisition of the Californian company would enhance the range of premium brands in its North American wine business.
Napa-based Chalone specialises in premium red and white wines and owns a string of vineyards in California and Washington state, as well as a 23.5% stake of the Fourth Growth estate of Chateau Duhart-Milon in Bordeaux in France in partnership with Domaines Barons de Rothschild (Lafite).
It said it expected the deal to yield significant savings and to make a profit during the third full year of ownership.
Diageo views the North American wine market, which it described as having favourable demographic and consumption trends, as a growth opportunity.
The group’s wine business in the region, Diageo Chateau & Estate Wines (DC&EW), incorporates Beaulieu Vineyard and Sterling Vineyards and includes the Sterling Vintner’s Collection, Solaris, Century Cellars and Blossom Hill brands.
Beaulieu and Sterling grew by 35% and 22% respectively in the last tax year, making DC&EW one of the best performing US wine companies.
Diageo North America president and chief executive Ivan Menezes said: “The compatibility of Chalone’s operations with our existing DC&EW business will enhance our ability to integrate the two businesses and to innovate.”
