just-drinks.com editor's weekly highlights
In This Issue...
The sale of Vin & Sprit, which includes one of the drinks industry’s brightest stars in Absolut Vodka, has at last been given the green light by the Swedish authorities.
The country’s parliament voted by 146 to 121 last week in favour of privatising six state-owned companies, including the liquor group.
The closeness of the vote, added to the latest opinion polls in Sweden that suggest almost half of the population doesn’t want to see the privatisation, demonstrates how politically sensitive this sale is going to be. All potential suitors are going to have to tread carefully.
But that hasn’t stopped the world’s major drinks groups preparing to slug it out to gain one of the most iconic brands in the spirits sector. Diageo and Fortune Brands have already demonstrated an interest. They are bound to be joined at the negotiating table soon by the likes of Bacardi, Pernod Ricard and a smattering of the world’s private equity groups.
With its existing commercial ties, Fortune remains the favourite at the moment and CEO Norman Wesley has been the most vocal suitor so far. "We believe that making the partnership we share with V&S permanent would be good for both companies,” he said last week, adding: "As a partner and not a competitor, we believe Fortune Brands is in a unique position to maintain the momentum of V&S, protect the heritage of the brands and preserve jobs in Sweden.”
The stakes are going to be high. Not only will Absolut add clout to whichever portfolio it’s added to – it’s 128 years old, but still growing at 7% in 2006 - but one analyst I spoke to last month believed this could be the last deal in the spirits industry of this size for some time. There are other companies out there of similar size and appeal, he argued, such as Brown-Forman, Bacardi and Fortune itself, but all are run by families who are loath to sell-out.
As such, an estimated price tag of US$5-$6 billion has already been linked to V&S. Add in the extra spice the political angle lends this story and we could have the most watchable bidding war on our hands since Allied fell to Pernod and Diageo.
Until next time...
Olly Wehring, Managing Editor
Rémy Martin has unveiled its new offering – Coeur de Cognac – with customary Cognaçais pomp. But for Chris Losh, the company’s announcement of the launch says as much about the art of Cognac PR as it does about the art of selection and blending.
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