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Uncorked - Pernod and Diageo - again

Published:  18 January, 2007

Well, well, well. Pernod and Diageo are at it again, carving up the drinks industry. We've all been wondering what Diageo was going to do regarding the carve-up of Allied Domecq. A lot of the smart money was on getting behind Constellation, but having sliced up Seagram successfully, it must have been a case of better the devil you know.

There's a bit of irony in the sale of Bushmills to Diageo, as those of you who have been around long enough will recall the Irish voting very much for taking French francs for their beloved Irish Distillers rather than English pounds from Grand Metropolitan (which, again ironically, merged with Guinness to form Diageo). The decision seemed to be very much about history rather than the money or corporate strategy - significant that it is the Northern Irish brand that has been sold off.

As for Montana, Diageo has extracted a high price for backing the Pernod bid. With its dominance of the New Zealand wine industry, Montana, sitting alongside Jacob's Creek, would have given Pernod Ricard a significant presence Down Under'. Diageo says it is a focused premium drinks company'. Some may question that when a brand like Gordon's has been sacrificed' on the altar of volume. Its strategy for wine has been less than sure-footed, but Montana is a sure-fire winner. Pernod was rubbing its hands with glee at the prospect, so hats off to Diageo for securing it.