Pernod Ricard, the world’s second-largest Western spirits maker, announced on Wednesday its agreement to sell the majority of its wine portfolio to the owners of Australia’s Accolade Wines.
This strategic divestment aims to allow Pernod Ricard to concentrate on its core business of premium spirits.
Details of the Sale
The sale includes Pernod Ricard’s wine brands from Australia, New Zealand, and Spain, featuring well-known labels such as Jacob's Creek, Stoneleigh, and Campo Viejo. The deal is pending regulatory approval and the price has not been disclosed. Despite selling these assets, Pernod Ricard will retain its champagne brands like Mumm and its wine brands in the U.S., France, Argentina, and China.
Strategic Refocus on Spirits
Pernod Ricard’s decision to sell its wine brands aligns with its strategy to focus more intensively on spirits, particularly high-end liquors like Absolut Vodka and Martell Cognac. This shift allows the company to allocate resources more efficiently to drive growth in its core business areas. The sale also responds to broader market trends, where wine consumption is declining in Western markets, losing ground to beer and spirits, and facing challenges in key markets like China.
Market and Industry Context
Wine sales constituted a mere 4% of Pernod Ricard’s total sales for the financial year ending June 2023, with a 2% decline. The wine industry is currently grappling with a global supply glut, adverse weather conditions affecting harvests, and shifting consumer preferences. The consumption of wine in China, previously a high-growth market, is also on the decline.
Benefits for Accolade Wines
The consortium of investors owning Accolade, Australian Wine Holdco Limited (AWL), which includes funds backed by Bain Capital, will integrate Pernod Ricard’s wine assets with Accolade. AWL’s spokesperson, Joshua Hart, emphasized that the acquisition would create a more stable and financially sustainable future for the combined business, enhancing its ability to adapt to changing consumer tastes and industry challenges.
Pernod Ricard’s Strategic Moves
Pernod Ricard has been actively exploring various options, including divestments, to streamline its portfolio. This latest move follows a report by the Australian Financial Review in May, which speculated that Pernod Ricard’s Australian wine assets could be valued at approximately AUD 500 million (USD 336.75 million).
Conclusion
The transaction, expected to close in the second half of 2025, marks a significant step in Pernod Ricard’s strategic refocusing. By shedding its underperforming wine division, the company aims to bolster its presence and growth in the lucrative spirits market, while Accolade Wines stands to gain from increased focus and resources dedicated to its newly acquired wine brands. This deal reflects the dynamic nature of the global beverage market, where companies continuously adapt to changing consumer preferences and market conditions.
Source: Reuters