Pernod Ricard to Sell Majority of Wine Portfolio to Focus on Spirits

Pernod Ricard announced on Wednesday that it has agreed to sell most of its wine portfolio to Australia’s Accolade Wines owners. The move is part of a strategic shift to focus on its core business of spirits.

The sale includes wine brands from Australia, New Zealand, and Spain, such as Jacobs Creek, Stoneleigh, and Campo Viejo, pending regulatory approvals. The price of the transaction was not disclosed.

Strategic Shift Towards Spirits:

The world’s No.2 Western spirits maker plans to sharpen its portfolio focus on spirits like Absolut Vodka and Martell cognac, particularly those with higher price tags. Despite divesting many wine brands, Pernod Ricard will retain ownership of champagne brands like Mumm and U.S. and French wine brands and labels in Argentina and China.

Pernod Ricard stated that the deal would allow it to allocate resources to brands that drive growth, while its former wine brands would benefit from the specialized focus of a dedicated wine player with global sales. “They will benefit from the focus required to achieve their potential, reinforce their position, and seize opportunities worldwide,” the company said.

Market Context and Challenges:

Wine sales constituted just 4% of Pernod’s sales in the financial year ending in June 2023, during which they declined by 2%. The company has increasingly emphasized expensive liquors as wine has lost popularity to beer and spirits in Western markets. Additionally, wine consumption in China, previously a high-growth market, is shrinking.

The global wine industry is currently facing a supply glut, which is causing some producers to destroy vines. Poor weather has also negatively impacted recent harvests. This challenging environment has contributed to Pernod’s decision to divest its wine assets.

Buyer Details and Future Plans:

The consortium of investors that owns Accolade, Australian Wine Holdco Limited (AWL), includes funds backed by U.S. private equity giant Bain Capital and others. AWL plans to integrate Pernod’s wine assets with Accolade.

“The deal will create a more certain and financially sustainable future for the business,” AWL spokesperson Joshua Hart said, noting that the combined business would be better equipped to adapt to changing consumer tastes and industry challenges.

Expected Transaction Timeline:

Pernod Ricard expects the transaction to close in the second half of 2025. Last year, the company indicated it was “continuously exploring” options, including divestments, following a report by the Australian Financial Review on a potential sale of some of its wine business. The newspaper, citing unnamed sources, reported in May that Pernod’s Australian wine assets could be worth about A$500 million ($336.75 million).