One of the World’s Biggest Booze Makers is Ditching Wine Brands as the World Drinks Less

Pernod Ricard, one of the world’s largest alcohol producers, is selling the majority of its wine brands as global wine consumption continues to decline. The French conglomerate, which owns renowned labels such as Absolut Vodka, Jameson Whiskey, and Beefeater Gin, announced on Wednesday that it will instead concentrate on expanding its champagne and premium spirits portfolio, particularly in the United States.

The sale involves seven wineries located in Australia, New Zealand, and Spain, transferring ownership to Australian Wine Holdco Limited, a consortium of international investors. The brands being sold include Jacob’s Creek, Orlando, St Hugo, Stoneleigh, Brancott Estate, Church Road, Campo Viejo, Ysios, Tarsus, and Azpilicueta. Financial details of the transaction were not disclosed.

This decision follows a global trend of decreasing wine consumption, which reached a 27-year low last year, according to the International Organisation of Vine and Wine (OIV). Pernod Ricard reported a 7% drop in sales for the wine brands slated for sale in the first quarter of this year, driven by reduced demand for Jacob’s Creek in India and Campo Viejo in the United States.

Since 2018, global wine consumption has been steadily declining, largely due to reduced consumption in China and the impact of high inflation on disposable incomes worldwide. Consumers are increasingly opting for beer and spirits or choosing to abstain from alcohol altogether for health reasons.

“The divestment makes sense as the segment has been underperforming for a while now and the global wine market is still challenging,” said Sarah Barrett, executive editor of Wine & Spirits Daily, a US-based trade publication. She noted that Pernod Ricard’s move aligns with a broader trend among large distillers to focus on premium spirits, citing Diageo’s sale of its wine business in 2015 as an example.

Pernod Ricard is also intensifying its focus on American whiskey. Last week, the company announced the formation of North American Distillers, a new US-based entity designed to support its American whiskey portfolio, which includes brands like Jefferson’s and Rabbit Hole.

“American whiskey is a dynamic spirits category, and our portfolio shows immense potential for future growth,” Richard Black, who will lead the new business, said in a statement.

The decline in global wine consumption has coincided with significant challenges in wine production. Last year, global wine production fell to its lowest level since 1961 due to extreme weather and fungal diseases affecting vineyards, according to the OIV. In Australia, overproduction has led to a glut of grapes, forcing the destruction of millions of vines and threatening the livelihoods of growers and winemakers.