Acquisition

Diageo PLC
20 December 2004

                                      Embargoed until 20 December 2004 at 7.00am



Diageo Signs Agreement to Acquire The Chalone Wine Group Ltd

Diageo plc has reached an agreement to acquire The Chalone Wine Group Ltd
(Nasdaq: CHLN) for a cash consideration of $14.25 per share.  The total
consideration including debt is therefore expected to be approximately $260
million. The transaction, which is subject to regulatory approval in the United
States, is expected to complete in the first quarter of the calendar year 2005.
The acquisition of Chalone enhances the range of premium brands in Diageo's
North American wine business and is expected to yield significant synergies. It
is therefore anticipated to become economic profit positive during the third
full year of ownership.

Diageo North America President and CEO, Ivan Menezes, said, 'The US wine market
represents a growth opportunity for Diageo, with favorable demographic and
consumption trends. Our North American wine business, Diageo Chateau & Estate
Wines, has proved its ability to develop premium brands and drive value through
integrating businesses. In our last fiscal year, Beaulieu Vineyard and Sterling
Vineyards reported growth of 35% and 22% respectively, making DC&E one of the
best performing US wine companies. The compatibility of Chalone's operations to
our existing Diageo Chateau and Estate Wines business will enhance our ability
to integrate the two businesses and to innovate, to the benefit of the enlarged
range of premium brands.'

Diageo Chateau & Estate Wines' president, Ray Chadwick, commented, 'By combining
the premium wines of Chalone with our current premium brands we can improve our
customer and consumer proposition to provide further growth opportunities.  We
look forward to working with the people and brands of Chalone as we continue to
focus on quality and our robust innovation agenda.'

In the year ended December 31, 2003, Chalone reported gross revenues of $69.4m,
net sales of $67.4m, EBITDA of $15.2 million and operating income of $7.5m.
Total volume for the year was 675,329 cases (135,065 equivalent cases).



                                     -ends-



Diageo 
Investor Enquiries    Catherine James  + 44 20 7927 5272 [e-mail]

Diageo 
Media Enquiries       Isabelle Thomas  + 44 20 7927 5967 [e-mail]

Diageo C&E Wines      Jon Pageler      + 1  707 299 2734
    - or -
Diageo North America  Gary Galanis     + 1 203 359 7193

Notes to Editor

Diageo is the world's leading premium drinks business.  With its global vision,
and local marketing focus, Diageo brings to consumers an outstanding collection
of beverage alcohol brands across the spirits, wine and beer categories
including Smirnoff, Guinness, Johnnie Walker, Baileys, J&B, Jose Cuervo,
Captain Morgan and Tanqueray, and Beaulieu Vineyard and Sterling Vineyards
wines.  Diageo trades in some 180 countries around the world and is listed on
both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE). For
more information about Diageo, its people, brands and performance, visit us at
www.diageo.com

About Diageo Chateau & Estate Wines

Diageo Chateau & Estate Wines is the US wine business of Diageo and produces and
markets premium wine brands such as Beaulieu Vineyard, Sterling Vineyards,
Sterling Vintner's Collection, Solaris, Century Cellars, and Blossom Hill, as
well as the French wines of Barton & Guestier.  The company is also a leading
importer of classified Bordeaux in the US.  The selection is complimented by
F.E. Trimbach wines from Alsace, a collection of Burgundy estate-bottled wines
and several other European wines.

About the Chalone Wine Group

The Chalone Wine Group is a Napa-based company specializing in premium red and
white varietal wines. In California, the Company owns and operates Acacia(R)
Vineyard in the Carneros area of Napa County, and Provenance(TM) Vineyards, 
Hewitt(TM) Vineyard and Jade Mountain(R) in Napa County; Chalone Vineyard in
Monterey County; and Moon Mountain(R) Vineyard, Dynamite(R) Vineyards and
Orogeny(TM) Vineyards in Sonoma County; and Echelon Vineyards in San Miguel. In
conjunction with its 50 percent joint-venture partner, Paragon Vineyard Co., the
Company also owns and operates Edna Valley Vineyard in San Luis Obispo County.
In Washington State, the Company owns and operates Sagelands(R) Vineyard and
Canoe Ridge(R) Vineyard. In the Bordeaux region of France, the Company owns 23.5
percent of the Fourth-Growth estate of Chateau Duhart-Milon, in partnership with
Domaines Barons de Rothschild (Lafite), which owns the other 76.5 percent.

Forward-looking and cautionary statements

This press release contains forward-looking statements based on management's
current expectations and assumptions. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ. The company
undertakes no obligation to publicly revise any forward-looking statements to
reflect future events or circumstances. Reference is also made to Diageo's
Annual Report on Form 20-F filed with the Securities and Exchange Commission and
the 'Risk Factors' contained therein for other factors that could impact forward
looking statements.

                      This information is provided by RNS
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