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Diageo has completed "non-core" brands clear-out - CFO

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Diageo's strategy to offload its smaller alcohol brands has reached an end with the company's latest divestment, according to the group's CFO.

Diageo is to sell some of its US spirits brands, including Parrot Bay rum, to Sazerac

Diageo is to sell some of its US spirits brands, including Parrot Bay rum, to Sazerac

Earlier today, the company announced its intention to sell 19 lower-end spirits brands to Sazerac in a deal worth US$550m. The move follows sales of other non-core assets on Diageo's books including the Gleneagles hotel as well as most of its wine brands, as the company prioritises premium spirits.

Speaking to just-drinks today, CFO Kathy Mikells said it is "pretty clear" that Diageo has now completed the divestment of all its "non-core" assets. Highlighting the Gleneagles and wine offloads, along with the sale of the Red Stripe brand to Heineken in 2015, Mikells added: "This really helps us to focus our premium spirits portfolio on premium-and-above brands."

Mikells also said that Diageo would continue to seek out premium M&A opportunities, such as its purchase last year of George Clooney-owned Casamigos Tequila. "That is a Tequila brand that's positioned in the super-premium space, which is a really high-growing part of the US market and we were looking to get more exposure," Mikells explained.

Mikells did not shed much more light on Diageo's announcement today of the sale to Sazerac, which includes Popov vodka, Goldschlager and Parrot Bay rum. However, the CFO confirmed that Sazerac was not the only suitor for the brands, which Diageo wanted to sell as a complete package rather than offload in batches. She also said that Diageo chose to hold on to Seagram's brand 7 Crown - at the same time as offloading three other Seagram's expressions - because it plays in the strategic American whiskey category.

"We feel that 7 Crown is important to us strategically," Mikells said. "It's positioned in the attractive US whiskey category and we clearly have occasion-driven strategies around that brand. That's something that we wanted to retain."

Seagram's 7 Crown is an American whiskey blend. The three Seagram's brands sold to Sazerac are Canadian whiskies.

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