James Wilmore

Analysis - Diageo could make 'quantum leap' for Moet Hennessy

By | 21 May 2013

Moet Hennessy is the wine and spirits unit of luxury goods group LVMH

Moet Hennessy is the wine and spirits unit of luxury goods group LVMH

Diageo could look to make a "quantum leap" by buying out LVMH's majority stake in Moet Hennessy under Ivan Menezes' leadership, according to an analyst. 

In a note today (21 May), Nomura's Ian Shackleton said that the UK firm's "strong" balance sheet means it "has firepower to do more deals". Talk of Diageo looking to buy Moet Hennessy outright surfaced in 2009, but LVMH ruled out the sale.

However, Shackleton said Diageo, which has a 34% stake in Moet Hennessy, would still be keen to acquire LVMH's 66% stake as the unit's Cognac business would boost its premiumisation "index" and increase its exposure to Asia. 

Diageo and Moet Hennessy already have joint distribution arrangements in place in "most" Asian markets and France, Nomura noted.

Based on Moet Hennessy's 2013 full-year EBITDA, Nomura values the overall business at around EUR29bn (GBP24bn). Therefore, Diageo would have to pay around EUR19bn for LVMH's 66% stake. 

Meanwhile, the appointment of Menezes, confirmed as Paul Walsh's replacement earlier this month, is likely to be an "evolutionary, rather than revolutionary" process, Shackleton suggested. 

The company is also expected to up its focus on emerging markets by acquiring more local spirits brands, he added.

However, Shackleton said Menezes' appointment had come "sooner than expected", with the anticipation previously that Walsh would remain until the company reported its full-year numbers at the end of July.

Expert analysis

2012 Global Multiple Beverage Marketplace

This report looks at the trends and issues affecting the coffee industry, including the constant innovation required to keep consumers' attention. It situates the U.S. market in its global context and delivers data on coffee production and consumption, imports and exports, advertising and demographics. It also covers the ready-to-drink coffee market and projects the U.S. coffee market five years into the future. Includes coverage of coffee pods.

Sectors: Mergers & acquisitions, Spirits

Companies: Diageo, LVMH

There are currently no comments on this article

Be the first to comment on this article

Related research

Diageo Plc in Spirits (World)

Since the great recession of 2008/2009 Diageo has transformed itself, primarily through acquisition, from being overly focused on mature markets to a more balanced geographic split and if, as seems likely it gains control of UB Group’s United Spirits...

Diageo Plc in Wine (World)

The world’s leading spirits producer, Diageo also ranks 23rd in the global wine market. This profile analyses the role of wine in the company’s wide-ranging alcoholic drinks operations, considering opportunities to address its weaknesses and adapt it...

Alcoholic Drinks in Australia

Alcoholic Drinks in Australia industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016). The profile also contains descriptions of the lea...

Related articles

In the Spotlight - Drinks Firms Support Typhoon Haiyan Relief Efforts

The final death count of Typhoon Haiyan, which hit the Philippines last week, is still a long way from being known. The relief effort is well underway, however, and drinks companies are among those that have moved to support those affected by the disaster.

just the Round-Up - The week in drinks

The top ten stories published on just-drinks this week:

UK: Diageo gives Baileys Christmas push with TV ad

Diageo is to launch its first UK Christmas TV advert in five years for Baileys Original Irish Cream with a modern take on The Nutcracker ballet.

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page