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French spirits group Pernod Ricard has signed a joint venture with Myanmar-based Yoma Strategic to become the first global drinks group to enter the country.
Pernod Ricard will acquire largest stake in new joint venture, which will focus on the production and distribution of whisky in Myanmar, alongside Yoma Strategic, Win Brothers and Delta Capital Myanmar.
The move by world’s second-largest wines and spirits company represents the first time a major global producer of wine and spirits has established a formal presence in Myanmar.
Global investment in the country remains embryonic in the country, given its history of military rule from 1962 to 2011 and more recent controversy and international condemnation over a crackdown the country’s Muslim Rohingyas.
The deal consolidates Pernod Ricard’s position in Asia, notably in the whisky category with Chivas, Ballantine’s and Seagram’s whiskies popular in the region.
Myanmar will be the 86th country in which Pernod Ricard has established a direct affiliate.
Melvyn Pun, CEO, Yoma Strategic stated, “We are delighted High Class Whisky will become part of the Pernod Ricard family alongside a portfolio of leading brands. Pernod Ricard brings a strong commitment to the local market, with best practices in distribution, marketing and production that will meaningfully strengthen our operations.”
Philippe Guettat, Chairman & CEO, Pernod Ricard Asia commented, “We are delighted to start our journey in Myanmar, a very promising and dynamic market which has seen tremendous economic progress over the past years.
“High Class Whisky has already built a solid foundation in the market, and we are committed to growing the brand further by leveraging our experience and capabilities.”
The agreement will see Pernod Ricard take the lead in management of the production facilities, distribution network and brand portfolio of Access Myanmar Distribution Company, the current joint venture between Yoma Strategic, Win Brothers and Delta Capital Myanmar.
This includes an access to more than 40,000 points of sale, 43 major wholesalers in key demand centres, approximately 230 delivery vehicles and around 250 staff as well as the High Class Whisky brand.
The closing of the transaction is subject to completion of the restructuring of the High Class business as well as customary conditions and is expected to take place in 2019.
Morning update
In wider retail, Australian retial group Wesfarmers has called time on its disastrous ownership of DIY chain Homebase after announcing it has a agreed to sell the chain to Hilco Capital.
Hilco will acquire all Homebase assets, including the Homebase brand, its store network, freehold property, property leases and inventory for a nominal amount. The 24 Bunnings pilot stores will convert to the Homebase brand promptly following completion.
Wesfarmers Managing Director Rob Scott said: “While the review confirmed the business is capable of returning to profitability over time, further capital investment is necessary to support the turnaround. The materiality of the opportunity and risks associated with turnaround are not considered to justify the additional capital and management attention required from Bunnings and Wesfarmers.
Homebase was acquired by Wesfarmers in 2016. Scott said the investment has been “disappointing”, with the problems arising from poor execution post-acquisition being compounded by a deterioration in the macro environment and retail sector in the UK
Wesfarmers expects to record a loss on disposal of £200 million to £230 million in the group’s 2018 full-year financial results. The divestment is expected to be completed by 30 June 2018.
See this week’s edition of The Grocer for analysis of results from M&S, Greencore, Dairy Crest and more later today on thegrocer.co.uk/finance.
On the markets this morning, the FTSE 100 has regained 0.5% to 7,749.3pts following a more conciliatory tone in a statement on US talks by North Korea.
Early risers include Greencore (GNC), up another 2.6% to 188.4p, Ocado (ODCO), up 1.5% to 886.7p and TATE & Lyle (TATE), up 1.5% to 663.2p.
Fallers include Devro (DVO), down 1.6% to 211.5p, PureCircle (PURE), down 1.5% to 335.8p and Nichols (NICL), down 0.7% to 267.2p.
Yesterday in the City
The FTSE 100 slid 0.9% back to 7,716.7pts yesterday on concerns over global stability after US President Donald Trump called off the planned diplomatic meeting with North Korea.
Tate & Lyle (TATE) shrugged off the wider market fall to jump 7.3% to 653.6p after improved pricing and helped lead to a 23% jump in full year pre-tax profits despite falling sales of its key Sucralose sugar substitute product.
PayPoint (PAY) was also on the up, rising 4.4% to 956p after posting a rise in annual sales and profits, driven by increased retail penetration.
Greencore (GNC) continued its good run this week, rising a further 4.9% to 183.5p – now higher than it was before its March profits warning – after its solid first half results earlier this week.
Other risers included Dairy Crest (DCG), up 3% to 510p, Cranswick (CWK), up 2.9% to 3,296p, FeverTree (FEVR), up 2.4% to 2,974p, and SSP Group (SSPG), up 1.5% to 659.9p.
Diageo was also up 1.4% to 2,745.5p after reports emerged it is plotting the sale of a portfolio of US-focussed spirits brands.
The day’s fallers included Morrisons (MRW), which was one of the FTSE 100’s biggest fallers after dropping 3.6% to 245.2p.
Also falling were Imperial Brands (IMB), down 2% to 2,761p, Associated British Foods (ABF), down 1.5% to 2,710p, Marks & Spencer (MKS), down 0.9% to 304.1p, Majestic Wine (WINE), down 3.7% to 432p and C&C Group (CCR) down 4.5% to €2.95.
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