MIXIN’ IT UP
Focus shifting to high-end labels
Liquor maker Diageo is selling 19 brands as it targets pricier labels,
Global alcohol giant Diageo is selling off a collection of underperforming brands to Kentucky-based distilling company Sazerac, including three Seagram’s whiskies produced in Canada.
News of the $500-million (U.S.) deal, announced Monday morning, came as little surprise to industry experts, who say Diageo has been trying to consolidate its drinks portfolio to become more focused on the high-end market.
“What this looks like is Diageo shedding dead weight that really hasn’t been working for them,” said Fred Minnick, editor of Bourbon+ magazine.
Most of the 19 brands sold by London-based Diageo aren’t big sales hits. Nor are they the type of brands sought by connoisseurs. Last year, Diageo bought George Clooney’s highend tequila brand Casamigos in a deal worth roughly $1 billion.
“Let’s face it: Seagram’s VO isn’t the type of thing people have been clamouring to get. It’s the type of thing you buy and then mix with Coke before you go to a football game,” said Minnick.
VO is one of three Seagram’s brands that were part of Monday’s deal. Like the other two — Seagram’s 83 and Seagram’s Five Star — it’s currently produced in Canada.
That’s something that won’t change, at least for now, according to Sazerac CEO Mark Brown.
“Production of the brands will continue at their current locations for at least one year and in the case of the Seagram, Parrot Bay and Yukon Jack brands, 10 years,” Brown wrote in an email to the Star.
“The Seagram brands are distilled, aged and bottled in Canada.”
Keeping things at their current location isn’t a given when brands are spun off to new com- panies, Minnick said. “Most of the time when brands are sold, production shifts to the new owner, especially if they’ve got capacity to do it, which Sazerac does.”
“The fact that it’s Sazerac buying them is probably a good sign for these brands, because they have a history of turning things around,” said Minnick, pointing in particular to the Weller bourbon brands Sazerac purchased from United Distillers in 1999.
“The Weller used to sit on the shelf for ages. Now it’s hard to get your hands on,” Minnick added.
Among the other brands included in the deal are Myers’s Rum, Goldschlager liqueur and Romana Sambuca.
The Goldschlager purchase is agood fit with Sazerac’s Fireball cinnamon-whisky liqueur.
“They’ll really be in control of the college shot market now,” Minnick said.
The deal is expected to be completed in early 2019.