INDIA: Diageo eyes stake in United Spirits
Diageo is one of several multinational drinks firms interested in purchasing a stake in Indian group United Spirits, just-drinks understands.
Responding to reports out of the country today (23 October) linking the two drinks giants, a Diageo spokesperson has told just-drinks: "Diageo can confirm that it is reviewing a possible collaboration with United Spirits Ltd. However, there is no certainty at this stage that these discussions will result in a transaction."
United Spirits, which is part of the United Brands business owned by Indian billionaire Vijay Mallya, has a majority share of the strongly emerging Indian spirits market.
Separately, just-drinks understands from another industry source that other international drinks firms have also shown interest in United Spirits, which is part of the United Brands business owned by Indian billionaire Vijay Mallya.
Both Bacardi and Japanese group Suntory are thought to be in the frame, a source familiar with the situation has told just-drinks. Bacardi declined to comment when contacted by just-drinks this afternoon. Suntory was unavailable for comment.
It is understood that Diageo's talks with United Spirits are in the early stages, although it remains unclear what kind of stake the global drinks giant might be looking for.
"Strategically [for Diageo] it makes lots of sense," an analyst has told just-drinks. Diageo, he said, would increase its presence in India's strong market for domestic spirits brands, but would also have the option to "trade up to international brands".
A power-sharing arrangement between Mallya and Diageo might be tricky to iron out, however, with neither likely to want to cede too much control to the other. "Diageo would want to end up controlling whatever it ended up with," the analyst said.
Diageo also already has a joint venture in India with Radico Khaitan, which is estimated to hold a 10% share of the country's spirits market.
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