More wine industry consolidation

[Jenise]

Doesn't affect most of us or the wines most of us buy, but still interesting to know.

From Shanken's daily rag:

TWE To Acquire Diageo’s Wine Business For $600 Million

Treasury Wine Estates (TWE) has made another major move in its ongoing rejuvenation project, agreeing to acquire the majority of Diageo’s U.S. and U.K. wine interests for $600 million. The deal, which is expected to close within three months, covers brands including Beaulieu, Sterling, Provenance, Rosenblum, Acacia, Hewitt and Blossom Hill among others. It does not include the U.K.'s Justerini & Brooks, Chalone or the Acacia winery and vineyard. The purchase price includes $552 million in cash and $48 million from the assumption of capitalized leases. Treasury says the acquisition will immediately double its premium and luxury net sales in the Americas.

Diageo’s U.S. wine division, Chateau & Estate, rose 2% as a whole last year to 3.8 million case depletions, according to Impact Databank, led by Beaulieu at 1.1 million cases and Sterling Vintner’s Collection at 900,000 cases. DC&E’s other key brands include Acacia, Sterling Vineyards and Rosenblum. Diageo recently reported that its North American wine volume and organic net sales both slipped by 2% in the 12 months through June. Globally, Diageo’s wine volume and net sales each declined 1% over the same period. The company’s wine business accounted for 4% of sales in its fiscal year completed in June.
“With the completion of this transaction Diageo will have released £1 billion from the sale of non-core assets since the start of the financial year," said Diageo CEO Ivan Menezes.

For TWE, the acquisition dovetails with CEO Michael Clarke’s plan to increase the company’s presence at the premium-and-above level of the wine market, while cutting costs and injecting the savings into marketing to boost the top line. That strategy has already born fruit since Clarke took the helm in early 2014. According to Impact Databank, TWE’s U.S. depletions reversed their previous decline last year, rising an aggregate 1.5% to 12.8 million cases, with growth led by Beringer, Matua and Penfolds.

[David M. Bueker]

Maybe Anheuser Busch will buy the whole deal.

[Robin Garr]

Maybe Anheuser Busch will buy the whole deal.

Wasn't Anheuser-Busch bought by the Belgian conglomerate InBev?

Maybe Anheuser Busch will buy the whole deal.

Wasn't Anheuser-Busch bought by the Belgian conglomerate InBev?

I think ImBev was also on the verge of buying YellowPissWater PLC, that maker of Miller and similar products.

[David M. Bueker]

They did buy them. But I was mostly just joking.

Jon Bonne summed up the Diageo Wine/TWE exchange as being summed up by one of the worst words a winegeek can hear:
"masstige". Oh how the mighty have fallen.

For TWE, the acquisition dovetails with CEO Michael Clarke’s plan to increase the company’s presence at the premium-and-above level of the wine market, while cutting costs and injecting the savings into marketing to boost the top line.

Sounds like a recipe for wines designed by marketing department to please the lowest common denominator at the highest prices . That may work for the group's bottom line but not for my palate.

The last time I bought any of the wines in this portfolio was in the 90s (Penfolds and Rosemont) and this news as well as knowledge of some of their prices make it a remote possibility possibility that I will ever do so again.

[David M. Bueker]

There are still a number of wines in the Penfolds lineup that are worthy of respect, without even considering the Grange. Their St. Henri Shiraz is a delicious wine that pleases this drinker, and is anything but "designed." Sure they have an entry level series that is pretty goopy and critter-like, but Penfolds at its heart is still Penfolds.

Rosemount jumped the shark many years ago.

The worm turns and turns and turns. The once great ancient Phoenician, Greek, and Roman wine industries went into downward spirals. Why? Large shippers overshadowed quality producers and made wine for the mass palate. Some of the shippers even stole the quality producer's names.

There are still a number of wines in the Penfolds lineup that are worthy of respect, without even considering the Grange. Their St. Henri Shiraz is a delicious wine that pleases this drinker, and is anything but "designed." Sure they have an entry level series that is pretty goopy and critter-like, but Penfolds at its heart is still Penfolds.

Rosemount jumped the shark many years ago.

David, my problem in renewing experiments with the Penfolds range is price. With a limited amount of Googling it appears that the best source for St.Henri Shiraz in France is the Spanish supplier Vinissimus, whose price for 2007 was €64 plus €2-3 for delivery depending on order size; it is, however, sold out at present. This seems quite a keen price because a UK merchant is offering a recent vintage for c.£60 = c.€80.

If I were spending that amount on a single bottle nowadays, there are a myriad of wines from Europe and perhaps California at that price or less, for which I would instinctively reach in preference.

No doubt, however, prices like that work for Treasury's bottom line.

I just finish reading George M. Taber’s “A Toast to Bargain Wines” For wine lovers it’s a good time to be living. This “consolidation” is no different from an up and coming wine region where the producers “partner-up” in a “council” or “alliance”. Possible hire a marketing and consultant expert or even an ‘image consultant expert”. In a sense this could lead to some degree of “specialization”.

Salute

I just finish reading George M. Taber’s “A Toast to Bargain Wines” For wine lovers it’s a good time to be living. This “consolidation” is no different from an up and coming wine region where the producers “partner-up” in a “council” or “alliance”. Possible hire a marketing and consultant expert or even an ‘image consultant expert”. In a sense this could lead to some degree of “specialization”.

Salute

R
As in, why many people are now drinking Cotes de Gascoyne wines, when a couple of years ago few people even knew there were CdG wines.

I just finish reading George M. Taber’s “A Toast to Bargain Wines” For wine lovers it’s a good time to be living. This “consolidation” is no different from an up and coming wine region where the producers “partner-up” in a “council” or “alliance”. Possible hire a marketing and consultant expert or even an ‘image consultant expert”. In a sense this could lead to some degree of “specialization”.

Salute

R
As in, why many people are now drinking Cotes de Gascoyne wines, when a couple of years ago few people even knew there were CdG wines.

True and true, initially, but the investment in sales and promotion it takes to sell one case of something special compared to what it takes to sell 100,000 cases of something that isn't ultimately gets the bean counter's attention. Then, the race is on--to the bottom.

I just finish reading George M. Taber’s “A Toast to Bargain Wines” For wine lovers it’s a good time to be living. This “consolidation” is no different from an up and coming wine region where the producers “partner-up” in a “council” or “alliance”. Possible hire a marketing and consultant expert or even an ‘image consultant expert”. In a sense this could lead to some degree of “specialization”.

Salute

R
As in, why many people are now drinking Cotes de Gascoyne wines, when a couple of years ago few people even knew there were CdG wines.

True and true, initially, but the investment in sales and promotion it takes to sell one case of something special compared to what it takes to sell 100,000 cases of something that isn't ultimately gets the bean counter's attention. Then, the race is on--to the bottom.

I will personally testify to that, Thomas.