No shortage of buyers seen for Seagram's liquor brands

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The thought of Vivendi spinning off Seagram Co.'s alcohol empire has suitors salivating over the chance to pick up a 160-plus-label portfolio that includes such marquee brands as Absolut, Captain Morgan and Crown Royal.

"You can't be in this business, with global consolidation going on, and not think this is the equivalent of Thanksgiving morning," said Tom Pirko, president of beverage consultancy Bevmark. "The question is who's got the carving fork and knife."

Seagram Spirits & Wine Group had $4.8 billion in sales last year, 39% of the company's $12.3 billion total.

ALLIED DOMECQ

Believed to be the lead suitor is U.K.-based Allied Domecq's spirits and wine unit, the world's distant No. 2 spirits marketer, which since last year has been reported to be interested in buying Seagram.

Allied Domecq President Philip Bowman has said he wants his company to lead the industry consolidation he considers to be inevitable.

Observers said Seagram's brands would fit nicely into Allied Domecq's portfolio with relatively little duplication. Allied doesn't have a vodka, while Seagram distributes Sweden's Absolut, the U.S.' leading imported vodka. Both companies have tequilas, but even if Allied Domecq's Sauza and Seagram's Don Julio and Margaritaville were combined, they still wouldn't reach the volume of Jose Cuervo, distributed by United Distillers & Vintners.

Other possible contenders for the business include Bacardi, Pernod Ricard and Brown-Forman Beverages Worldwide, marketer of Southern Comfort and Jack Daniel's Tennessee whiskey.

Analysts speculate United Distillers isn't interested because it's so large -- with more than double the case volume of Allied -- that it would run into trouble from global antitrust regulators. In addition, observers said, the company is still trying to work out the kinks from the 1997 merger of Grand Metropolitan and United Distillers/Guinness.

Seagram's brands, however, could stay closer to home, given talk the Bronfman family may bid.

With their current 24% ownership of Seagram, relatives feasibly could raise the estimated $7 billion to $9 billion the spirits and wine business is expected to fetch. Currently, however, they and other Seagram stockholders are slated to get Vivendi Universal stock for their stock.

Even though the Bronfmans started diversifying from spirits in 1963, those close to the family say the idea of leaving the business would've bordered on heresy a decade earlier.

The company's history is so closely linked to spirits that its stock ticker symbol is VO, the name of its Canadian whiskey.

The unloading of the spirits business isn't surprising to people who know Edgar Bronfman Jr., who held the title of president-CEO at Seagram Co. A songwriter with Hollywood aspirations, he never seemed to have the passion for spirits his father and grandfather possessed, they said.

TURNED ON BY GLITZ

"Glitz was what turned him on. He liked hobnobbing with the stars. That's who he is. That's why he bought all that movie stuff," said one executive who worked with Mr. Bronfman and his father for years.

Also uncertain is the fate of Seagram's ad shops. Its two primary liquor agencies are TBWA/Chiat/Day and Grey Worldwide, both New York.

"There are certainly differences of opinion as to the future of the company, and that will play out in grand style," one observer said. "It's a human drama worthy of daytime TV."

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