Gonzalez is best known outside Spain for Tio Pepe sherry, while at home it makes Soberano, the country's leading brandy.
Trading links between the two companies started in the 1960s, when W&A Gilbey, now part of Grand Met's IDV drinks arm, distributed Tio Pepe in Britain.
Yesterday's disclosure that talks are taking place follows a recent raft of speculation in Spain that pointed to a bid for Gonzalez.
Industry observers said that a closer relationship would enable IDV to use its vast distribution network to ply Tio Pepe and Soberano in international markets.
Gonzalez, which turned over more than pounds 110m last year, is significantly smaller than IDV, which made trading profits of pounds 454m in 1990/91 out of a group total from on-going businesses of pounds 957m.
Grand Metropolitan also disclosed yesterday that Inntrepreneur Estates, the pub company jointly owned with Courage, had complied with the Government's Beer Orders by freeing- more than 1,200 pubs from a direct tie.Reuse content