Pernod Ricard announced on Wednesday that it has decided to sell the majority of its wine portfolio to the founders of Australia’s Accolade Wines. Consequently, the company can now concentrate on its main business of spirits. This move involved getting rid of a drag division.
The world’s second-largest manufacturer of Western spirits intends to market its wine brands, which include well-known names like Jacobs Creek, Stoneleigh, and Campo Viejo. However, this is subject to regulatory approvals in Australia, New Zealand, and Spain. It didn’t reveal the cost.
With this change, Pernod will focus more on high-end liquors like Absolut Vodka and Martell cognac, narrowing its product line. It will also keep holding labels in Argentina and China, along with its French and American wine brands and champagne trademarks like Mumm.
Pernod stated that the agreement will free up its resources to focus on growth-promoting brands. Meanwhile, its previous wine labels will become the property of a committed wine player with international sales.
“(They) will benefit from the focus required to achieve their potential, reinforce their position and seize opportunities around the world,” the distiller stated.
Sales of wine were for merely 4% of Pernod’s total sales in the fiscal year that concluded in June 2023, a 2% decrease. Since wine has lost drinkers to beer and spirits in Western countries, the corporation has shifted its focus more and more into pricey liquors. China was formerly a wine market with rapid expansion, but consumption is currently declining.
Worldwide wine producers are being forced to kill vines due to an excess in supply. The unfavorable weather has also affected recent years’ harvests.
Australian Wine Holdco Limited (AWL), the group of investors that owns Accolade, is supported by money from sources like the massive American private equity firm Bain Capital. AWL declared that it will merge Accolade’s assets with Pernod’s.
Joshua Hart, a spokesman for AWL, stated that the deal will create a more certain and financially sustainable future for the business. Moreover, the merged company will be more equipped to handle industry problems and adjust to shifting consumer preferences.
The deal is anticipated to finalize in the second half of 2025, according to Pernod.
According to a statement from Jefferies analyst Edward Mundy, the purchase represents a “de-cluttering” that is occurring throughout the spirits industry.
Suntory Global Spirits sold the cognac brand Courvoisier to concentrate on core trademarks like Jim Beam whiskey. Meanwhile, rival Diageo sold off assets related to African beer and more.
The maker of spirits responded to an Australian Financial Review story last year, stating it was “continuously exploring” options. Additionally, it mentioned considering divestitures regarding a potential sale of a portion of its wine company.
According to a May newspaper article citing anonymous sources, Pernod’s Australian wine holdings may be valued at over A$500 million ($336.75 million).
On the news, Pernod’s shares increased by almost 1%.
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