Diageo has sold 2,000 acres of vineyards in Napa Valley, plus the majority of of two major wineries.
The UK drinks giant has signed a sale and leaseback agreement for some of its leading California vineyards and wineries – part of a wholesale review of its US wine business.
Under the terms of the deal, Diageo has sold some 2,000 acres of vineyards in Napa plus the wineries, production facilities, retail operations and visitor centres of Beaulieu Vineyards and Sterling Vineyards.
Realty Income Corporation has acquired the assets, valued at US$260m, and will lease them back to Diageo for an initial 20-year period, with the option to extend that for 80 years in total.
Diageo will continue to manage and operate all of the vineyards and facilities covered by the deal, and will still own and market the various wine brands affected.
The agreement is part of a wide-ranging review of the company’s Diageo Chateau & Estate US wine business, announced in May this year.
Diageo said it would make ‘fundamental changes’ to its operations, including the sale of non-priority brands and the loss of about 90 jobs, or roughly 14% of its US wine workforce.
Last year, it integrated the back-office functions of Diageo Chateau & Estate and Guinness USA into its Diageo North America business, with the loss of 150 jobs.
The company stressed that Sterling and Beaulieu remained ‘a strategic part of Diageo’s wine business’ after the deal, which is expected to close by the end of June.
Written by Richard Woodard