Diageo continues wine sell-off

Diageo is selling its entire Argentine wine business including its Navarro Correas and San Telmo brands to Gupo Peñaflor, continuing its strategy to offload its wine arm.

The Navarro range (photo: Navarro)

Peñaflor will also be appointed as the distributor of Diageo’s international spirits brands in Argentina and, after an interim period, will produce the company’s domestic spirits brands.

The agreement will result in an exceptional loss before taxation of approximately £60 million upon completion, Diageo said.

The financial details of the deal, which is expected to be finalised in 2016, have not been disclosed.

“The appointment of a dedicated distributor in Argentina will strengthen Diageo’s route to market and is expected to accelerate the performance of Diageo’s brands there,” the company said. In the year ended 30 June 2015, net sales of the wine brands were £18.5 million.

The news comes after Diageo received regulatory approval on Tuesday for its deal to sell its US wine operation to Treasury Wine Estates.

The £361 million Treasury deal, which was made public in October, will see it add Diageo’s Percy Fox business, including wine brands Blossom Hill and Piat d’Or, to its portfolio.

Treasury is also buying the Chateaux & Estate Wine business in the US, whose brands include Beaulieu Vineyards, Sterling Vineyards, Acacia, Provenance and Hewitt.