Strategic partnership

Diageo PLC
27 February 2006



                                                                27 February 2006





    DIAGEO AND A 1, an alFa group company, create strAtegic partnership for
                              expansion in russia

Diageo and an Alfa Group company, A 1 Group Limited, the owner of the Smirnov
Trading House announce that they have signed an agreement to form a joint
venture company to market, sell and distribute spirits in Russia.  It is
anticipated that the joint venture will become fully operational in July 2006.
The joint venture is conditional on, among other things, receipt of regulatory
clearance from the Russian anti-monopoly authorities.

Through the joint venture with A 1, Diageo, the world's leading premium spirits
company, acquires a majority interest in the fast growing Smirnov brand and
business which will form the basis of the new operation in Russia. The Smirnov
brand will join Diageo's portfolio within the newly formed company.

The future joint venture company will be owned 75% by Diageo and 25% by A 1 with
both parties contributing to the strategic management of the joint venture's
distribution entity in Russia, Diageo Distribution ZAO. This company  will be
the exclusive distributor of Diageo spirits brands and the Smirnov vodka brand
in Russia. It will be a strong sales and marketing organisation, capable of
accelerating growth across the entire spirits brands portfolio with operations
in Moscow and major cities across Russia.

On completion of the transaction, Diageo will pay to Alfa Group a total of US$50
million for its interest in the joint venture.  The transaction is expected to
meet Diageo's usual financial investment criteria.

Alison Forrestal, General Manager, Diageo Russia, will be appointed General
Director of Diageo Distribution, and Andrey Kravets, currently General Manager
Smirnov Trading House, will be appointed Deputy General Director.

The new business will represent a strong presence in Russia.  When fully
operational, it is expected to employ between 250-300 people, resourced from the
current businesses with additional employees recruited from the Russian market.
The increased focus behind the brands is expected to improve growth. Completion
of the transaction will also unite the Smirnoff / Smirnov brands under common
ownership.

Andrew Morgan, President Europe, Diageo plc says, 'This joint venture represents
a significant step in Diageo's strategy to invest in the markets we have
identified for future growth - strengthening our existing presence here in
Russia. A 1  has significant experience of partnering with companies in Russia.
Combining this with Diageo's expertise in spirits' marketing means that this
venture creates a strong foundation for our joint ambition to become the leading
spirits business in this market. Following a successful distributor relationship
with Roust Inc, we are keen to take our investment in Russia to the next stage.'



Igor Baranovsky, Managing Director of A 1, says, 'The joint venture combines the
potentials of the Alfa Group, the leading Russian investor, and Diageo, the
world's leading premium spirits company. This marks the appearance of a new
player with an extremely promising future. Diageo is a very strong partner, with
exemplary business philosophy, and a highly professional team. As for the
Smirnov vodka brand and business - it's a very attractive asset for strategic
investment. Building the Smirnov brand will now acquire a new emphasis.
Legendary Smirnoff and Smirnov, with their unique Russian heritage are uniting,
in an outstanding portfolio. This opens new horizons for their future growth.'



                                     -Ends-

Contacts

Investor enquiries: Catherine James  [phone] [e-mail]





For further information please contact:


Isabelle Thomas                                      Elena Kuznetsova

Diageo plc                                           Diageo Russia

[phone]                                     [phone]

[e-mail]                           [e-mail]


Vera Bragina

Smirnov Trading House                                A 1 Investment Company

[phone]                                        + 7 495 976 00 66

[e-mail]                            [e-mail]





Notes to editors

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, Johnnie Walker, Guinness, Baileys, J&B, Captain Morgan,
Cuervo, Tanqueray, Crown Royal and Beaulieu Vineyard and Sterling Vineyards
wines.

Diageo is a global company, trading in over 180 markets around the world and
listed on both the New York Stock Exchange (DEO) and the London Stock Exchange
(DGE). We employ over 20,000 people worldwide with offices in around 80
countries. We have manufacturing facilities across the globe including Great
Britain, Ireland, United States, Canada, Spain, Italy, Africa, Latin America,
Australia, India and the Caribbean.

Diageo was formed in 1997, following the merger of Guinness and GrandMet and is
headquartered in London. The word Diageo comes from the Latin for day (dia) and
the Greek  for world (geo). We take this to mean every day, everywhere, people
celebrate with our brands.

 For more information about Diageo, its people, brands and performance, visit us
at www.diageo.com



A 1, a subsidiary of Alfa Group, is the key investment division of the largest
Russian consortium.

A 1 typically focuses on value-oriented, longer-term investment projects. Its
objective is releasing the potential of portfolio companies through strategic
management, consolidation, restructuring assets, crisis management and other
aspects of corporate business development.

A 1's long-term interests are in the creation of sustainable competitive
businesses via the introduction of modern management systems.

A 1's professionals have unique experience of successful projects in various
industries: Alfa Group strategic assets (Alfa Bank, TNK, national retail chain
Perekryostok, Vimpelcom and Megaphone - the largest Russian telecommunications
operators), as well as establishment of new businesses in oil and gas,
metallurgy, pulp and paper industry, agribusiness, FMCG sector, etc.

The Smirnov Trading House, one of the A 1's FMCG assets, was set up in Moscow in
2002 to resume production of vodka from recipes of the Russia's famous wine
maker Petr Arseniyevich Smirnov (1831 - 1898). In 2005, The Smirnov Trading
House introduced the new collection of alcoholic beverages to the Russian market
so that production and sales volumes have increased four and a half times
compared to 2004.






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            The company news service from the London Stock Exchange