2 European Distillers to Merge U.S. Sales Arms

Two European wine-and-spirits giants have struck a deal to increase their clout in distributing such foreign-made brands as Johnnie Walker Scotch, Tanqueray gin and Hennessy cognac as well as Simi and Domaine Chandon wines from California.

Paris-based Moet-Hennessy S.A. and Guinness PLC of London agreed to merge their U.S. subsidiaries in a joint venture to distribute each other’s brands. Similar arrangements are being set up to cover Japan and elsewhere in the Far East, the companies said.

The new venture, combining Moet-Hennessy’s Schieffelin & Co. with Guinness’ Somerset Group, will do business as Schieffelin & Somerset. The partners said they imported 3.5 million cases of wine and spirits last year, generating combined U.S. sales of about $600 million.

“It’s a no-cash transaction,” said Anne Luther of Schieffelin, who was named a vice president of the 50-50 joint venture. “It’s an exchange of distribution rights.”

The goal, Luther said, is to give the two partners more leverage in dealing with wholesalers and in getting retail shelf space.

The venture will distribute the following brands from Schieffelin: Hennessy cognac; Petite Liqueur and Marie Brizzard liqueurs; Dom Perignon, Moet et Chandon and Dom Runiart Champagnes, along with California’s Simi wines and Domaine Chandon Champagne. Other wines include Blue Nun from Germany, Wan Fu from France, Ruffino Italian wine and Marquis Riscal from Spain.

United Distillers, Guinness’ spirits operation, represented in this country by Somerset, will contribute Johnnie Walker (Red, Black and Swing) Scotch, Tanqueray gin, Cardhu (a single-malt Scotch made by Johnnie Walker), John Begg Scotch and Pimm’s No. 1 Cup.

Alain Chevalier, chairman of Moet-Hennessy, said in Paris that the new venture will create a distribution company that will be “among the strongest” in its North American, Japanese and Far Eastern markets. Anthony Tennant, group chief executive of Guinness, added that the partnership will be “significantly larger than any competitor” in the Far East.

J. Penn Kavanagh, chief executive of Schieffelin, will head the joint venture.

Moet-Hennessy last week announced it was merging its luxury product operations with those of Louis Vuitton, the luggage company. The merged business--to be called Moet-Hennessy Louis Vuitton--will become the sixth-largest company to trade on the Bourse, the Paris stock exchange, with annual revenue of $2.2 billion.

The deal follows a wave of British moves to further penetrate the North American beverage market. In the last year, British firms have invested over $6 billion in North American acquisitions.