Enough of tequila talk, Diageo tells Mexicans

LONDON - Reuters

REUTERS photo

Diageo, the world’s biggest spirits maker which also owns Turkey’s Mey İçki, has pulled out of long-running talks to buy a stake in top-selling tequila brand Jose Cuervo in a surprise move that could slow its race into fast-growing emerging markets.

The collapse of negotiations could also fuel speculation the British group will seek a deal with U.S. group Beam, home of the world’s No.2 tequila brand Sauza. A weekend newspaper report said Diageo had held talks with Japanese brewer Suntory over a joint bid for Beam worth over $10 billion.

Faced with sluggish growth in recession-hit European economies, Diageo is looking to tap burgeoning middle classes in Asia, Africa and Latin America.

A deal with Jose Cuervo, valued at about $3 billion, would have given Diageo access to the emerging Mexican spirits market and a stronger product range there to go with its Johnnie Walker whisky and Smirnoff vodka brands.