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Diageo expands with premium US wine buy

By Neil Merrett , 29-Jan-2008

Diageo is to expand its presence within the high growth US market for premium wines with the acquisition of national producer Rosenblum Cellars for $105m (€71m).

The group, which is one of the leading beverage manufacturers in the world, says the latest purchase will allow it add a further array of Zinfandel grape-based wine brands to their Diageo Chateau & Estate Wines portfolio in the US.

 

 

 

A Diageo spokesperson told BeverageDaily.com that the move reflected the importance of acquiring premium wine brands in the country to target a key growth segment for its US operations.

 

 

 

"Zinfandel is a variety that is outpacing the wine category in terms of growth," they stated. "At the same time, while we make some outstanding Zinfandel wines, we don't currently have a brand that is focused and committed to this [segment]."

 

 

 

Though targeted specifically at the US, the group group that its worldwide distribution network meant that further expansion could be possible for the brands in the future.

 

 

 

As part of the deal, the cellar's co-founder Kent Rosenblum will stay on with the acquired group to create new wine ranges and advise on group-wide strategies, Diageo said.

 

 

 

"We look forward to working with the Rosenblums in growing this brand as we continue to focus on the quality for which these wines are known and in addition allow the wines to benefit from Diageo's superior distribution network in the US," Ivan Menezes, president of the group's North American operations stated.

 

 

 

Diageo has not been the only company interested in expansion into the branded Us wine market.

 

 

 

Just last month, Constellation Brands stepped up its own presence within the premium US wine market with the $885m acquisition of Fortune Brands wine portfolio in the country.

 

 

 

The move saw the group acquiring a number of the US' leading wine brands such as Clos du Bois, Wild Horse, Geyser Peak along with five wineries situated in some of California's most prominent growing regions.

 

 

 

Company spokesperson Mike Martin told BeverageDaily.com at the time that the investment reflected the fact that US consumers simply want better wines.

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