UK’s Diageo Won’t Sell Off Chinese Liquor Brand SJF, Execs Say

(Yicai) Feb. 26 -- UK whiskey giant Diageo will not sell its Chinese liquor brand Shui Jing Fang at a low price, according to two of the company’s executives.

“We are not going to sell brands below fair value,” Chief Executive Officer Sir Dave Lewis said in response to a question about Diageo’s strategic reviews and potential disposals during the company’s conference call for the release of its fiscal 2026 interim results yesterday.

After Diageo announced it intended to divest some non-core assets at the end of last year, rumors started circulating about a potential sale of SJF. The Chinese firm has already denied the rumors in the past.

“If somebody were to approach us and make us an offer that we cannot refuse for portfolio assets, then as sensible businesspeople, we will obviously listen and engage with that,” Lewis noted. “What I want to be clear is we are not actively out in the marketplace hawking a whole series of what people have called ‘tail brands,’ and nor are we active in a couple of things that you have speculated about.”

Diageo’s Chief Financial Officer Nik Jhangiani also answered that question. “As Dave said, we have been clear, no fireside sale of any of these assets,” he noted. “More importantly, let the strategy first be laid out, and that will determine what we think about our brands and our portfolio going forward.

“One comment about SJF,” he added. “We have never talked about that. That is speculation, and so we would not comment on that further.”

SJF may not be a non-sale asset, Shen Meng, executive director of Chanson Capital, told Yicai. Lewis did not rule out the possibility that Diageo could consider selling SJF in the future, especially given the opportunity arising from the slowdown in the Chinese liquor market, he noted, adding that the proceeds from such a sale could be used to seek better returns elsewhere.

China’s liquor consumption is undergoing significant adjustments, and the performance of spirit brands has been affected. SJF announced last month that it expects its net profit to have shrunk 71 percent to CNY390 million (USD57 million) and its revenue to have fallen 42 percent to CNY3 billion (USD440 million) last year from 2024.

Diageo bought its first stake in SJF in December 2006 and later increased it through multiple transactions. In 2019, Diageo became SJF’s controller with a combined stake of about 63 percent.

Diageo’s earnings report showed yesterday that its net sales declined 4 percent to USD10.5 billion in the six months ended Dec. 31 from a year earlier, mainly because of a weak performance in North America and China. Organic sales growth in North America and Asia-Pacific, including China, fell 6.8 percent and 11 percent, respectively, in the period.

Editors: Tang Shihua, Futura Costaglione