LONDON—Diageo PLC is selling a portfolio of 19 brands, including Seagram’s VO whiskey and cinnamon schnapps Goldschläger, to Sazerac Co. for $550 million as it pivots toward premium brands and higher-growth products.

The world’s largest liquor maker, which owns Johnnie Walker whisky and Tanqueray gin, said Monday it would return net proceeds of about £340 million ($441 million) to investors through share buybacks.

Diageo...