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Posted: Wednesday, 12 June 2019 12:20

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Buyers line up for Pernod Ricard Wine Business including Jacobs Creek

June 12: Three months after delWine reported the initial news item about Pernod Ricard considering the sales of its wine business that included the ubiquitous top selling wine in India Jacobs Creek and also Campo Viejo, it appears our report based on several Aussie media reports was correct and the potential buyers are lining up with their bids for the initial auction to reinforce their existing wine business

When delWine reported in its 15th March edition about the potential sale of the wine division that includes labels like Jacobs Creek, the company had refused to talk about the potential sale. However, our report was authentic as another Report

Now confirms that the private- equity biggie Carlyle Group is one of the potential bidders for the auction. It has drafted in a second investment bank Credit Suisse to help it put together a bid for the up-for-sale wine assets of Pernod Ricard including Jacobs Creek. It has already been working with Bank of America Merrill Lynch. Credit Suisse will help with due diligence and funding. Carlyle is expected to increase its wine business- Accolade Wines (which includes Hardys) through this transaction. Thus if it is successful, both powerful Aussie brands Hardys and Jacobs Creek will have the same owners.

Of course, Carlyle is expected to face competition for the Pernod Ricard assets for acquisition.  European buyout company PAI Partners has been working with Rothschild, while global private equity investors including KKR and TPG Capital are expected to take par at least t in the initial stages of the auction. Reportedly, Treasury Wine Estates has already connected with Goldman Sachs for advice in the auction.

Pernod Ricard's strategic wine brands portfolio is up for sale being handled by Morgan Stanley and JP Morgan. The auction process is expected to start next month in July.The unit is likely to be worth $1 billion, sources said, which was about the same as what Carlyle paid for Accolade early last year.

The up-for-sale wine unit accounts for about 5 per cent of Pernod Ricard's sales. The bulk of its earnings come from champagne brands including Mumm and Perrier-Jouet and liquor like Chivas Regal Whisky and Absolut Vodka. Mumm is not doing great business in India where Moet Chandon rules the roost but the whisky and vodka labels are leading in their categories with a widespread distribution network that has been used extensively to push sales of Jacobs Creek and now Campo Viejo.

According to WBM wine magazine, they had approached Brett McKinnon, global operations director at Pernod Ricard Winemakers, for a comment that got the typical response, “Pernod Ricard does not comment on market rumours.”

Further expounding, it said, “The Group has already mentioned several times that it intends to continue the dynamic management of its portfolio, remaining one of the consolidators of the sector as recalled by our CEO Alexandre Ricard during the H1 financial communication.” In accordance with this strategy, the Group regularly assesses every available opportunity: tactical acquisitions as proved by the recent acquisition of the Italian gin Malfy, or divestment of brands, through one criterion in particular, i.e. their capacity to create or continue to create value for the business. In this context, any other comment would be mere speculation.

According to the same report, Bloomberg had said that Pernod Ricard’s wine operation is less profitable than its portfolio of liquor brands. The wine brands include Jacob’s Creek, St Hugo, Church Road, Stoneleigh and G.H Mumm. Jacob’s Creek is the number one bottled wine brand in Australia and the number one premium Australian wine brand in 17 international markets, including India. According to Pernod Ricard one million glasses of Jacob’s Creek are consumed every day across the globe.

So next time in the near future, if you drink your favourite Australian moniker Jacob’s Creek, it might not be from the existing producer Pernod Ricard.

Subhash Arora

 

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