Diageo rumoured to be selling-off Cinzano to concentrate on key products

- Last updated on GMT

Related tags: Diageo, Whisky, Scotch whisky

Diageo is believed to be planning a disposal of its Cinzano spirit brand as part of its move to focus on key products.It is trying to reverse a...

Diageo is believed to be planning a disposal of its Cinzano spirit brand as part of its move to focus on key products.

It is trying to reverse a downward trend for sales in the UK after revealing that volumes had fallen in British pubs for Smirnoff vodka, Bell's whisky and Gordon's gin.

Diageo's Guinness GB business is about to hand over brewing of Harp Irish Lager to Wolverhampton & Dudley Breweries (W&DB), who will brew it from May 1, to focus on its stout brand.

The licence from Scottish Courage to brew Kronenbourg 1664 will also pass to W&DB from May 1 for the remaining two years of the contract.

Guinness has provided Diageo with its biggest growth, boosted by the launch of the successful Extra Cold Guinness.

In Britain, Guinness volume grew three per cent in the on-trade and market share improved to 5.3 per cent.

UDV chief executive Jack Keenan said the spirits business would be turned around through focusing on key brands.

"We have to get the fresh air in and get this very traditional business growing faster than before," he said.

Sales of Smirnoff were down six per cent in the last six months of last year, although liqueur Bailey's grew by three per cent.

He said the company had increased the growth rate of Scotch whisky, including its classic single malts range.

But he warned that the first six months of this year would be difficult, predicting further brand disposals.

So far this year it has raised £218m by selling 14 underperforming North American brands, including Canadian whiskies, bourbons and brandies.

It is believed to be considering a sell-off of Cinzano along with continental brandies Metaxa, Asbach and Vecchia Romagna, although it will probably keep the distribution rights.

Diageo chief executive John McGrath said the whole group suffered because of turmoil in Latin America and Asia.

"It pushed us off course but we managed the market very effectively," he said. "It's a rollercoaster and we have accepted that."

Turnover for the six months to the end of December fell by 6.7 per cent to £6.27bn and operating profit was flat at £900m. Because of cost savings, the merged group still managed to push pre-tax profits up by 36 per cent to £972m.

Related topics: Spirits & Cocktails

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