Is Diageo trying to sell its baijiu business?
Johnnie Walker-owned Diageo is staying quiet on reports that claim the spirits giant is assessing the sale of its baijiu operation in China.
According to unnamed Bloomberg sources, the maker of brands such as Smirnoff, Gordons and Johnnie Walker is weighing up the sale of its more than 63% stake in Shanghai stock exchange-listed Sichuan Swellfun Co, also known as Shuijingfang.
Sichuan Swellfun Co produces Shui Jing Fang among other Baijiu brands.
Diageo has sounded out potential buyers through Goldman Sachs Group and UBS Group, according to Bloomberg.
Diageo declined The Spirits Business‘ request for comment.
For quarter one (Q1) of its latest financial year, Diageo saw ‘strong’ double-digit declines in both volume and net sales in Greater China, which it reasoned to ‘reduced consumption occasions across the baijiu category’ and ‘market policy changes’.
Diageo said the weak performance from its Chinese white spirits business negatively impacted group sales by approximately 2.5% in Q1.
Diageo also has a US$120 million whisky distillery in Eryuan County, Yunnan, which is called YunTuo.
Last year, Diageo put a cost-saving programme – titled Accelerate – into motion.
Accelerate aims to save the company US$625 million in the next three years with part of the plan including trimming its portfolio of “non-core, non-strategic” brands.
This has seen it sell Cacique rum to La Martiniquaise-Bardinet, Australian ready-to-drink (RTD) brands UDL and Ruski Lemon to Vok Beverage and, most recently, its controlling stake in East African Breweries to Japan’s Asahi Group Holdings.
The company is ushering in 2026 with a new CEO in former Tesco boss Sir David Lewis, who took over from Debra Crew after her exit in July last year. CFO Nik Jhangiani had served as CEO in the interim.
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