Australia’s Treasury Wine Estates has acquired the bulk of the assets from Diageo’s U.S. and UK wine operations, including Blossom Hill in the UK and Beaulieu Vineyards in the U.S., for $552 million.

 

Diageo claims that the sale, which also includes the UK’s Percy Fox and the Chateau and Estate Wines in the U.S., was decided upon as wine is ‘no longer core’ to the group’s business, and would free up the group to focus on other segments of its business and enable it to repay borrowings.  

 

Meanwhile, Treasury Wine Estates will be the new parent of Blossom Hill, the second largest winery in the UK by both volume and by value in its market, and will be able to ‘transform’ its U.S. business, especially regarding its high-growth ‘masstige’, or luxury segments.

 

Treasury Wine Estate’s portfolio already includes Penfolds, Stags’ Leap, and Etude but will now gain Sterling Vineyards, Acacia, Provenance and Hewitt, and Beaulieu Vineyards in the U.S. among others, in a transaction that is being called a ‘game changer’ for its U.S. portfolio, and is being marked as a means to accelerate growth in the Canadian, Asian, U.S., and Latin American markets.

 

As Diageo pares down and sells off non-core assets, the group has released £1 billion during this financial year to date, freeing the group to focus on its main business of spirits and beers and its portfolio containing Johnnie Walker, Smirnoff, Baileys, Bell’s and Guinness.

 

Although the transaction includes the majority of Diageo’s wine assets, the group will retain Justernini & Brooks Wine Merchants in the UK, the Navarro Correas wine business in Argentina, the wine brands Mey Icki in Turkey and USL in India, and the Chalone brand and assets in the U.S.

 

The deal is expected to be completed within three months once regulatory approvals have been acquired.