Diageo enters partnership in Vietnam

Diageo, the world’s leading premium drinks business, has entered into a strategic partnership agreement with Hanoi Liquor Joint Stock Company (Halico) in Vietnam.  In addition, Diageo has agreed to acquire a 23.6% stake in Halico from VinaCapital Vietnam Opportunity Fund, for approximately £33 million.

Halico is the largest domestic branded spirits producer in Vietnam.  The strategic partnership agreement with Halico represents a significant venture by Diageo into the fast growing Vietnamese branded spirits sector.  Halico is well-positioned to benefit from this growth given its significant distribution scale and recent investment in a new state of the art production facility.  As Halico’s strategic partner, Diageo will assist Halico in enhancing its capabilities across a range of functions, including innovation, branding, supply, distribution and corporate relations.  In return, Diageo will become a long term equity investor in Halico and its main brand Vodka Hanoi.  

In parallel and separately, Diageo will continue to develop its international premium spirits portfolio, led by Johnnie Walker, Smirnoff and Baileys, through its wholly owned subsidiary Diageo Vietnam.

Ho Van Hai, director of Halico said, "Halico has seen double digit growth in the last four years, but we are very keen to accelerate our development as Vietnam continues to offer attractive growth potential. Diageo is a great partner for us – they have experience working with large local industry players and have a reputation for building iconic brands. Their understanding of consumers and cultures in Asia and their commitment to this region gives us the confidence that, as a result of this partnership, we will take Halico and our brands to greater heights."

Mr Gilbert Ghostine, president of Diageo Asia Pacific commented, "Halico is Vietnam’s number one local sprits company with the number one vodka brand, Vodka Hanoi. Their strong distribution and recent investment into their state of the art production facility speaks of their ambitions in this market. Diageo has many successful partnerships in Asia Pacific and partnerships are integral to the way we want to grow our business in this region."

Diageo expects to complete the investment in Halico in its 2011 fiscal year, subject to customary conditions to completion.  In Diageo’s financial statements, the 23.6% stake in Halico will be accounted for as an associate.

1 February 2011 - Felicity Murray