Diageo divests Korean whisky brand to local PE consortium
Global beverage giant Diageo has agreed to sell Windsor, Korea’s best-selling whisky brand, to Bayside Private Equity and Metis Private Equity for KRW 200bn (USD 163.2m).
Windsor has been Korea’s best-selling scotch since 2006 and claims a 35% local market share. Since 2015, three low-alcohol whisky-based sub-brands have been launched, W Ice and W Signature 17, and W Signature 12. The latter, launched in 2017, sold 100,000 bottles in its first month.
Windsor had a carrying value of GBP 145m (USD 191m) in Diageo’s 2021 annual report, but it is as a struggling brand. It caused a GBP 434m impairment charge for the 12 months ended June 2020 and net sales declined 8% year-on-year in 2021. Diageo noted that sales across all its brands in Korea rose 10%, with the decline of Windsor partially offsetting the strength of Johnnie Walker.
The company, which also owns brands such as Bell’s, Baileys, Smirnoff, Captain Morgan, Gordon’s, and Guinness, will focus on sales of its international spirits and beer business in Korea. These are being driven by “premiumisation and consumer interest in categories like international whisky,” said Sam Fischer, president of Asia Pacific and global travel at Diageo, in a statement.
“We take a disciplined approach to capital allocation and this sale is very much in line with our track record of active portfolio management,” he added, in reference to the divestment. Diageo will sell Scotch whisky to Bayside and Metis under a 10-year supply agreement.
Bayside was established in 2016 and operates on a project fund basis, with a particular focus on food and beverage. AVCJ Research has records of a KRW 65bn (USD 58m) acquisition of catering and resort operator Welliv in 2017, a KRW 15bn purchase of restaurant chain On The Border in 2019, and a KRW 30bn acquisition of snack franchises School Food and School Food Delivery, also in 2019.
In 2020, Bayside bought Hyundai Heavy Industries Power Systems from Korea Shipbuilding & Offshore Engineering for KRW 195.8bn.
Bum Jun Kim, CEO of Bayside, added: “Windsor is an important addition to our investment portfolio and allows us to participate in the dynamic Korean beverage alcohol market. We are confident that we can build on the innovation of Windsor and unlock further potential.”
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