UK: Diageo cools wine buy talk, Bourbon next?

Diageo has calmed press reports suggesting it is keen to expand its wine portfolio.

The UK-based drinks giant said today (18 December) that reports suggesting that it will focus more specifically on the wine category were "really nothing new".

CEO Paul Walsh was cited in two European newspapers over the weekend saying that Diageo's purchase of Californian wine company Chalone in early 2005 was the shape of things to come. "We already bought the Chalone group," Walsh told German paper Handelsblatt. "There will be a whole lot of these opportunities and we will make these acquisitions.

"We'll only buy something that is growing faster than our current portfolio," Walsh continued. "On top of that, it has to produce a return over three or four years that is higher than our cost of capital."

But, speaking to just-drinks, a spokesperson for Diageo moved to quell the suggestion. "There really is nothing new in this story," the spokesperson said. "We will always take a look at anything that meets our investment criteria - it's not fair to limit this specifically to wine although, with wine, it's always difficult to make the figures add-up."

The spokesperson noted that Diageo has a balanced portfolio, having filled a gap in the Irish Whiskey segment with the purchase of Bushmills from Pernod in August last year. "The only major category we're a little light in is Bourbon," the spokesperson noted.

The only Bourbon in the Diageo portfolio is Bulleit Bourbon, made in Kentucky.