Blog: Drinks group for sale, good runner, one careful owner, US$6bn O.N.O
Olly Wehring | 25 June 2007
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 don’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.
Whisk(e)y companies spend a lot of money and effort ageing their products for that premium taste....
PepsiCo created a stir last week with the news it is testing a product called Caleb's Kola, with some in the media claiming it was the beginning of a new “craft soda” category....
SABMiller's bid to widen the appeal of beer is very much in evidence at its latest 'House of Peroni' - with beer cocktails and a bigger bottle for the Italian lager brand on offer. ...
Here's a round-up of the big stories on just-drinks last week, featuring PepsiCo, SABMiller, the Scotch whisky category and the US wine market....
- Diageo's future brighter than present suggests
- Analysis - Remy's Cognac "dead-cat bounce"
- Diageo's Q1 Results by Region
- Focus - Remy Cointreau's H1 Performance by Brand
- Three Questions for the Drinks Industry
- Moët Hennessy unveils first Travel Retail outlet
- Diageo puts Beckham centre stage in Haig Club ad
- United Spirits sees Q1 net loss
- Beam Suntory, Edrington part ways in Travel Retail
- TWE unveils Penfolds range after CEO's "bold move"