The two groups also announced a new JV in South Africa

The two groups also announced a new JV in South Africa

Diageo and the head of UB Group are set to make the latter's sorghum beer business in South Africa a joint venture, off the back of today's spirits deal between the two firms. 

The two sides, which secured a long-awaited deal earlier today (9 November), will take joint control of the South Africa unit, with Diageo spending US$36m on 50% of the division. The other half would be held by a company affiliated to UB Group's chief, Vijay Mallya.

Both sides will have equal shareholder votes, with Mallya taking the chairmanship on a 'no casting vote' basis.

“Diageo and Dr Mallya are also considering the possibility of extending their joint venture relationship by establishing a joint venture in respect of certain emerging markets in Africa and Asia (excluding India),” the two firms said.

Whilst emphasising that terms have not been determined, the South African JV “would be contributed to it”.

Diageo already operates a cost-sharing JV in South Africa, Brandhouse Beverages, with Heineken and Namibia Breweries. Brandhouse is a marketing, sales and distribution company for premium alcohol beverages in the country. At the same time, Diageo and Heineken jointly own a brewery in Sedibeng near Johannesburg, which was opened two years ago.