Diageo offers to sell Whyte & Mackay

UK drinks group Diageo has offered to sell the bulk of its Whyte & Mackay whisky business to ease competition concerns that have been raised by the Office of Fair Trading (OFT).

The sale offer comes amid fears that Diageo’s continued ownership of the Whyte & Mackay business could drive up prices for drinkers. Retailers had complained to the OFT that Diageo’s acquisition of United Spirits last year resulted in two of the UK’s leading blended bottled whisky brands coming under the same owner.

OFT chief economist Chris Walters said: “Our investigation considered a wide range of evidence and we concluded that the likely loss of competition could give rise to higher prices for retailers, and ultimately consumers.”

The OFT’s investigation found that there was “substantial competition” in the retail sector between Bell’s whisky, which is owned by Diageo, and Whyte & Mackay’s own-label and branded blended whisky.

Walters added: “These companies are two of the leading suppliers of blended bottled whisky in the UK, especially to supermarkets and other large retailers.

“We are now considering Diageo’s offer to sell the bulk of the Whyte & Mackay business with the exception of two malt distilleries, to address our concerns.”

Diageo has offered to sell all but two of Whyte & Mackay businesses, Dalmore and Tamnavulin.

A Diageo spokesperson said that while the OFT considers Diageo’s offer to sell the businesses, its duty “to refer the [Diageo and United Spirits] merger to the Competition Commission is suspended”.

The spokesperson added: “The remedy involves the sale of Whyte & Mackay’s Invergordon, Jura and Fettercairn distilleries (and all of Whyte & Mackay’s central operations). The inventory and assets associated with the malt distilleries that supply United Spirits and primarily international markets (i.e. the Dalmore and Tamnavulin distilleries) will be retained within the United Spirits group/ operations.”