Treasury Wine Estates’ UK portfolio will now include Blossom Hill after it completed the £362 million purchase of Diageo’s wine division.

The Australian wine producer has snapped up Diageo’s UK wine arm, Percy Fox, along with its US subsidiary, Chateau & Estate Wines.

It means Treasury will now supply Blossom Hill and its stablemates alongside leading brands Wolf Blass, Lindeman’s, Rosemount Estate, Penfolds and Beringer.

TWE can also draw on Chilean brands Antares and Santa Carolina, Sterling Vineyards, Sterling Vineyards and Beaulieu Vinyeards of California and French brand Piat d’Or.

The Chateau & Estate Wines purchase will allow TWE to consolidate its position in the US, where it is already a leading player with Beringer and Penfolds. It is especially keen to capture more of the “masstige” – mass prestige, for the uninitiated – market in the US.

“This acquisition will transform our US business into a larger player of scale in the high-growth US market,” said chief executive Michael Clarke.

“The additional supply will be a game-changer for our US brands, providing us with an immediate opportunity to step-change our growth in the US, Canada, Asia and Latin America.” 

But a UK portfolio featuring a top three brand in Blossom Hill – which rivals Accolade brands Hardys and Echo Falls for the top spot – on top of leading premium brands Wolf Blass and Lindeman’s plus fine wines from Penfolds and Beringer, will also make TWE a huge player in Britain now, and a genuine rival to Accolade for the position of leading supplier to the off-trade.

It means Diageo’s wine interests are limited to Justerini & Brooks Wine Merchants, the Argentinian wine business of Navarro Correas, the wine brands of Mey Icki and USL, the Chalone brand and assets and the Acacia winery and vineyard.

Ivan Menezes, chief executive of the British firm, the world’s leading spirits supplier, said: “Diageo’s strategy is to drive stronger, sustained performance through focus on our core portfolio and today’s announcement is another element of that strategy in action. Wine is no longer core to Diageo and this sale gives us greater focus.

“With the completion of this transaction Diageo will have released £1 billion from the sale of non-core assets since the start of the financial year. This proactive portfolio approach has focused the business, enhanced our financial strength, improved our returns and strengthened the business, positioning us even more firmly to deliver our performance ambition.”

The net proceeds of approximately £320 million, after tax and transaction costs will be used to repay borrowings. The transaction, which is subject to regulatory approval, is expected to complete around the end of the calendar year.

Last year, Diageo announced it was selling stakes in two beer brewers to Heineken for £530 million.