Word: seagrams
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...Seagram's buys Coke's wine
...Sprite, pouring Minute Maid orange juice and sipping wine, while watching the Columbia Pictures movie Tootsie. If that scene is re-created next year, something will be missing: the wine. Last week Coca-Cola (1982 sales: $6.2 billion) announced plans to sell its wine business to distiller Joseph E. Seagram & Sons for more than $200 million in cash...
...same time that Coca-Cola was thinking about getting out of wines, Seagram's (fiscal 1982 sales: $2.8 billion) was trying to figure out how to expand its wine business, which includes the Paul Masson brand. Its distilled liquor sales have been flat or falling, in part because Americans are drinking more wine. Former Bendix Executive Mary E. Cunningham, who joined the company in 1981 as a vice president of strategic planning, presented a report last year suggesting that Seagram's could reap larger profits in wine. The study mentioned three potential acquisitions, one of which...
Industry watchers generally approved the move. Said Kidder, Peabody Analyst Roy Burry: "Combined with its already substantial wine interests, the buy will give Seagram's the critical mass of volume needed to market and distribute wines effectively." Paying off Coca-Cola will not be difficult. Seagram's plans to pay the $200 million purchase price in part with $120 million in annual dividends from its 50.3 million shares of Du Pont stock; the distiller acquired most of its 21% stake in Du Pont, now worth $2.6 billion, as a result of the 1981 battle to take over Conoco...
...gentleman in a gentleman's industry," said Emanuel Goldman, a partner of Montgomery Securities in San Francisco. It is expected that the tough advertising that Coca-Cola fostered will probably end. Meanwhile, wine prices are likely to start increasing, largely because of a predicted small 1983 harvest. Seagram's may be getting deeper into wine at the perfect moment...