The biggest spirits industry buyouts

The quest for spirits industry domination has never been easy – or cheap – as this countdown of the world’s biggest spirits industry buyouts shows.

We list the biggest buyouts ever seen in the spirits industry

With the recent announcement that Suntory is acquiring Beam Inc for US$16 billion, eyes are frantically turning to other industry leaders, searching for signs of potential counter-bids.

The shifting powers of the drinks industry have always been something of a fascination for consumers and commentators alike.

Bulging portfolios and widespread international presence means that prices are high, and stakes are raised even higher with each bump in the road.

Big deals such as the merge of Guinness and Grand Metropolitan to create Diageo, and Diageo’s subsequent joint acquisition of Seagram’s with Pernod Ricard, have transformed the face of the sector, and many more are sure to do the same in years to come.

Click through the following pages to see some of the biggest buyouts ever made in the spirits industry.

Guinness and Grand Metropolitan form Diageo

Probably the most significant merger ever to take place in drinks industry history, two British companies, distiller Grand Metropolitan and brewer Guinness, merged in 1997 to create a $33bn (£20.5bn) conglomerate – Diageo, now the world’s biggest drinks company.

The new wine and spirits business was three times as large as those of its nearest rivals at the time, Canada’s Seagram’s and the UK’s Allied Domecq.

At the time, Grand Metropolitan and Guinness combined ranked as the world’s seventh-largest food and drink company in terms of the total value of their shares outstanding, just behind McDonald’s and just ahead of Campbell Soup.

Tony Greener, Guinness’s chairman, and George Bull, the chairman of Grand Met, said they agreed to explore a merger over dinner in London just one month before it happened. 

Suntory acquires Beam Inc

The most recent news in the world of large acquisitions and mergers, this month Japanese group Suntory revealed that it is to buy American firm Beam Inc for US$16bn.

The acquisition of the US drinks group, whose brands include Jim Beam Bourbon, Courvoisier Cognac and Sauza Tequila, will make Suntory the world’s third largest drinks group behind Diageo and Pernod Ricard.

However, controversy has already reared its head, as legal action has been taken by numerous Beam shareholders who claim the deal is potentially “unfair” and generates “conflicts of interest”.

Beam responded, branding these allegations as “baseless” and “without merit”, adding that it would “vigorously defend against any and all such claims”.

The story continues …

Diageo and Pernod Ricard share Seagram’s

In 2000, rival spirits companies Diageo and Pernod Ricard, now ranked as the first and second largest in the world respectively, jointly bid for Canada’s Seagram’s and split the assets, offering US$8.15bn in total

Diageo increased its market share in the US – now its biggest and most profitable market – to 22%, while the deal allowed Pernod to take third place on the global spirits scene, jumping from fifth.

Pernod Ricard contributed approximately US$3.15 billion dollars, or 38.6% of the total purchase price, while Diageo acquired 61.4 percent of the Seagram business, gaining unrivalled dominance in the spirits industry.

The consortium was in a bidding war with the UK’s Allied Domecq for the Canadian firm. It also was widely reported at the time that Diageo had been in talks with Bacardi over a joint bid for Seagram’s, before siding with Pernod.

Pernod Ricard and Fortune Brands buy Allied Domecq

In 2005, British firm Allied Domecq, then the world’s second-largest spirits company, was jointly acquired by Pernod Ricard and its American rival Fortune Brands for £7.4bn.

The brands formerly owned by Allied included Beefeater Gin and Ballantine’s Scotch whisky.

As part of the deal, Pernod immediately sold some of its acquired brands, such as Canadian Club and Courvoisier to Fortune for £2.8bn, amid concerns over questions surrounding competition between Pernod’s stable and its newly acquired brands.

The deal allowed Pernod Ricard to usurp Allied’s place as the world’s second-largest drinks company behind Diageo.

Pernod Ricard buys Absolut

In 2008, Pernod Ricard paid £4.5bn for Swedish company Vin & Spirit Group, owner of Absolut Vodka, in a bid to challenge Diageo’s dominance of the vodka market.

Although the deal did not include Vin & Spirit’s 10% stake in Beam Inc, it served to increase Pernod’s share of the US spirits market – which is the largest in the world.

In particular, Absolut was the top-performing premium spirits in the US at the time, adding to its allure for Pernod Ricard.

With the acquisition of V&S, Pernod Ricard massively enhanced its presence on the worldwide spirits stage. It’s Global spirits volumes grew to 91 million cases, with a 27% market share in the premium spirits segment.

Bacardi acquires Grey Goose

Bacardi agreed to buy Grey Goose vodka from Frank Importing Co for £1.1bn in 2004, firmly establishing itself in the premium vodka industry.

The acquisition was described by Bacardi as something which allowed it to fill a “significant category gap” and extend its present in the “all-important” US market.

It was reported at the time that Grey Goose had sales of around 1.8 million cases in the US, accounting for about half of super-premium sales there.

Diageo buys majority stake in United Spirits

Somewhat of a rollercoaster deal which has experienced a plethora of hiccups and setbacks, Diageo’s bid to acquire a controlling stake in Indian company United Spirits continues to dominate headlines.

In November 2012, Diageo expressed plans to buy a 53.4% majority stake in United Spirits for £1.28bn ($2.09bn).

Yet this stake proved too ambitious, and Diageo’s ownership currently sits at 25.02%. This total interest is the result of shares purchased by Diageo in July last year, totaling £344m overall, together with the 14.5 million shares purchased in May and the 58,000 acquired in its mandatory tender offer.

But even this new deal has proved far from simple. Once approval was finally granted by the Securities and Exchange Board of India and the Competition Commission of India earlier last year, the deal looked set. But even after completion in July, further upsets came in the form of an Office of Fair Trading (OFT) ruling that questioned the competition between Diageo’s Bell’s blended whisky, and United Spirits’ own-brand label Whyte & Mackay.

Diageo responded by suggesting it would be willing to sell a portion of the Whyte & Mackay business in order to mitigate concerns, bringing about more conjectural murmurings about who potential bidders might be …

LVMH snaps up Glenmorangie

Scotch whisky producer Glenmornagie was bought by French luxury good company Louis Vuitton Moet Hennessy (LVMH) in 2004 for a sum of £300 million

Glenmorangie was put on the market after the company’s leading shareholders, the McDonald family, announced their desire to sell their stake.

The takeover was seen as particularly dramatic at the time as it followed a bidding withdrawal from main rival Pernod Ricard.

This allowed LVMH, which was predominantly known for its Champagne brands, to move into dark spirits.

Distell acquires Burn Stewart Distillers

South African spirits, wines and RTDs producer Distell purchased Burn Stewart Distillers in 2013 to increase its foothold in the Scotch whisky market.

Distell acquired Burns Stewart, producer of Bunnahabhain Scotch, for just over £160m from CL World Brands Limited and Angostura Limited, owners of Hine Cognac and Angostura Bitters respectively, amongst other global brands.

The deal follows a partnership created by Distell and Burns Stewart in 2007, which saw the African drinks company become co-owner and marketer of Bunnahabhain, Black Bottle, and Scottish Leader.

Russian Standard purchases CEDC

Russian Standard completed its acquisition of former rival Central European Distribution Corporation (CEDC) in June last year, making it the world’s second largest vodka producer by volume.

Although the exact cost of the sale was not disclosed, the consolidated business stands at 34 million nine-litre case sales a year, distributed across over 80 markets.

Joining the group’s vodka portfolio – which is led by the flagship Russian Standard brand – are the Russian Green Mark, Parliament and Zhuravli brands, and Poland’s Zubrowka, Absolwent and Soplica. All six are domestic market leaders within their categories.