Diageo opts for Ketel One over Absolut vodka

08 February, 2008

Diageo has pulled out of the race to buy Absolut after sealing a £460 million deal to buy a 50 per cent stake in the global distribution, sales and marketing rights of the super-premium Dutch vodka brand Ketel One .

A Diageo spokeswoman said: "We did not submit a bid for Absolut. We expressed an interest, but we had an opportunity for this partnership and decided it was a better fit with more potential for growth."

Regulatory considerations had also played a part in

the thinking, she said. "We would have faced difficulties in some markets, but now our deal is done and we aren't caught up in an auction process which could go on for some time."

The Ketel One deal includes the perpetual global rights to sell, market and distribute the brand, currently handled by Inspirit Brands in the UK.

Inspirit said it expected no changes to the UK distribution arrangements until the Diageo acquisition was completed at the end of March.

The main appeal of the Ketel One deal for Diageo is the brand's strength in the US

where much of its 1.9 million cases of annual volume are sold, though Absolut is the super-premium segment leader with 39 per cent share compared

with Ketel's 14 per cent.

UK sales are largely through style bars and upmarket wine and spirit retailers.

Diageo and the Nolet family, who own the brand, will form a 50-50 joint venture for

sales, marketing and distribution, with the family retaining ownership of the brand and the distillery at Schiedam.

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