Diageo to sell Argentinean wine assets to Grupo Peñaflor

Diageo Plc, the world's largest spirits company, yesterday struck a deal to sell its wine assets in Argentina to Grupo Peñaflor for an undisclosed amount.

The sale comes less than a month after Diageo agreed to sell a majority of its US and British wine operations to Australian vintner Treasury Wine for $552 million. (See: Treasury Wine to buy majority of Diageo's US, British wine assets for $552 mn)

The sale includes the Navarro Correas and San Telmo wine brands, together with production sites and vineyards.

These brands had sales of £18.5 million in the year ended 30 June 2015.

The transaction, which is eps neutral in the first full year following completion, will result in an exceptional loss before taxation of approximately £60 million upon completion, said the London-based company.

In addition, Peñaflor will be appointed as the distributor of Diageo's international spirits brands and, after an interim period, will jointly produce with Diageo its domestic spirits brands across Argentina.

Diageo said that the appointment of a dedicated distributor in Argentina will strengthen its route to market and is expected to accelerate the performance of its brands in the country.

Following completion of this transaction, Diageo's wine interests will be limited to Justerini & Brooks wine merchants, the Turkish wine brand of Mey Icki and India's United Spirits wine brands, and the US brands of Chalone and the Acacia winery.

Grupo Peñaflor is the largest producer and distributor of wine in Argentina, and one of the top ten wine producers worldwide.

Diageo owns some of the world's leading beverage brands, including Johnnie Walker whisky, Smirnoff vodka, Tanqueray gin, Don Julio tequila and Guinness beer.