Diageo sells more wine assets and agrees Argentinian spirits partnership

Diageo has sold off more of its wine assets for an amount described as "not material" after deciding earlier this year that wine was "no longer core".

The FTSE 100 confirmed on Thursday that it has agreed the sale of its Argentinian wine interests, including Navarro Correas and San Telmo wine brands and associated production sites and vineyards, to local company Grupo Peñaflor and also appointed them as dedicated distributor for its spirits brands.

Peñaflor, the largest producer and distributor of wine in Argentina, will initially just distribute Diageo's international spirits brands in the country and, after an interim period of unstated length, will jointly produce with Diageo its domestic spirits brands across Argentina.

"The appointment of a dedicated distributor in Argentina will strengthen Diageo's route to market and is expected to accelerate the performance of Diageo's brands there," the company said.

In the year ended 30 June 2015 the Argentinian assets generated net sales of £18.5m.

The transaction, which is EPS-neutral in the first full year following completion, Diageo said, but will result in a small exceptional loss before taxation of approximately £60m upon completion.

Last month Diageo agreed to sell two of its wine business, including brands such as Blossom Hill and Yellow Tail, for $552m to US-based Treasury Wine Estates, which is expected to reap net proceeds of roughly £320m when it completes later this year that will be used to pay off debt.

Having also recently divested its 57.9% stake in Jamaican Red Stripe brewer Desnoes & Geddes and Guinness Anchor Berhad to Heineken for around £515m, Diageo will have released £1bn through selling non-core assets since the start of the financial year.

Chief executive Ivan Menezes last month said the new strategy was to drive "stronger, sustained performance" through focus on a smaller core portfolio.

Shares in Diageo were up 5.75p, or 0.3%, to 1,899.75p after the announcement on Thursday afternoon.