Diageo hints at further Tequila acquisitions

Diageo believes it now has enough Tequila brands to regain its position in the market, but has hinted at further acquisitions in the future.

Don Julio Tequila will be the global flagship of Diageo’s Tequila portfolio

The British drinks group lost its largest Tequila brand in June 2013 when its distribution contract with Jose Cuervo came to an end.

But in recent weeks Diageo has made two brand acquisitions: DeLeón, a 50:50 partnership with US rapper Sean “Diddy” Combs, and the outright acquisition of super-premium Peligroso.

Speaking at a presentation of the firm’s half-year financial results, Diageo CEO Ivan Menezes he was “very pleased” with his bolstered Tequila portfolio, which also includes the ultra-premium Don Julio.

“We’re committed to recovering the profits we made in Tequila when we had Jose Cuervo with us, and I’m delighted to say we moved very quickly on these opportunities,” he said.

Menezes added that the group will be “very innovative in how we build [DeLeón],” with an initial focus on the US only.

As for the super-premium Peligroso, the CEO said that despite its small size, “with our marketing flair and distribution strength in the US market I expect both these brands to do exciting things for us”.

Having dropped Jose Cuervo from its distribution portfolio in June 2013, after the two companies failed to agree on a takeover deal, Diageo failed to see any growth in reported net sales for the first quarter of its 2013/14 financial year.

While Menezes is bullish regarding his new, three-strong Tequila portfolio, he hinted to reporters that further acquisitions were to come.

“Overall on our Tequila strategy we have a few other ideas we are looking at but I’m very pleased with these three players in Tequila; we have enough scale to really regain our position.”