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Diageo puts last remaining US winery on the market

Published:  22 October, 2015

Diageo has put its Chalone Californian winery on the market, according to reports in the US media.

The move follows Diageo's sale to Treasury Wine Estates of the bulk of its wine assets, which was announced last week.

TWE declined to buy Chalone as part of the £390 million deal. "They're long on Chardonnay," TWE chief executive Michael Clarke told the Sydney Morning Herald.

TWE's Chateau St Jean US wine brand already has a strong presence in the Chardonnay market.

Chardonnay accounts for around 50% of Chalone's output. The vineyard also grows a number of other white and red varietals, including Pinot Blanc, Pinot Noir and Grenache.

Diageo bought Chalone in late 2004 for £170 million, an acquisition led by then Diageo US chief executive Ivan Menezes.

Menezes is now chief executive of the whole Diageo group. Investors have forced him to divest Diageo's non-core assets, among them its wine operations, after a string of poor results for the group.

Chalone was selling around 30,000 cases a year before it was acquired by Diageo. Sales subsequently peaked at over 200,000 cases, although they have declined in recent years.

TWE's principal interest in Diageo's wine estates was its premium US brands, Sterling and Beaulieu.

However, Diageo made the acquisition of UK mass-market brand Blossom Hill a non-negotiable part of the deal.