Top 10 spirits industry acquisitions

Amid rumours that the world’s largest drinks group Diageo is being eyed for acquisition, we take a look at which new spirits buyouts have got the industry talking lately.

A number of high-profile spirits industry acquisitions have shook-up the spirits industry in recent years

Diageo has remained tight-lipped over recent rumours it is the object of a Brazilian billionaire’s acquisition affections, but a number of leading firms have loudly celebrated their industry-transforming M&A deals.

Last year saw the creation of the world’s new third largest drinks group following a landmark buyout, while Diageo and Jose Cuervo indulged in a spot of brand swapping.

Bacardi and Brown-Forman took their first tentative steps into the fast-growing American and Irish whiskey industries respectively as William Grant & Sons acquired an iconic Scotch whisky liqueur.

Grabbing headlines and getting industry tongues wagging, there has been a spate of high profile spirits acquisitions over the past couple of years.

Click through the following pages to see our selection of the top 10 new deals.

Suntory and Beam Inc

Price: US$16bn

The start of 2014 saw one of the biggest spirits industry acquisitions in recent years take place when Japanese drinks group Suntory Holdings purchased Beam Inc for US$16 billion, creating the world’s third largest drinks groups, Beam Suntory Inc.

The deal allowed the new group to gain access to both Asian and western distribution channels, taking advantage of demand and soaring interest in both American and Japanese whisky.

Diageo and United Spirits

Price: £1.13bn

Following a series of protracted and widely reported negotiations, UK drinks giant Diageo finally completed its acquisition of a controlling stake in India’s largest drinks group United Spirits, maker of McDowell’s No.1, last summer. Diageo made a bid of £1.13bn to increase its 29% stake in USL to 55% in April last year.

The group’s grip on United Spirits seemed at risk of loosening when the UK’s Office of Fair Trading raised competition concerns between Diageo’s Bell’s blended Scotch whisky, and USL’s own label Whyte & Mackay Scotch – leading to an acquisition included later in this list.

While the deal has been formally completed, the alliance has not been without controversy, as Diageo continues with its investigation into USL’s books and the group’s board cast a vote of no confidence in billionaire chairman Vijay Mallya.

Bacardi and Angel’s Envy

Price: Undisclosed

Drinks groups have been jostling over the past couple of years to gain a foothold in the fast-growing American whiskey sector, and Bermuda-based drinks firm Bacardi is no different.

The group acquired Angel’s Envy Bourbon in March this year for an undisclosed sum, marking its first, and much anticipated, foray into the category. Previously owned by Louisville Distilling Co., Bacardi is continuing with work to build a new US$12m distillery for the brand.

Just a couple of days later it emerged that Bacardi had acquired a stake in independent Scotch whisky bottler Compass Box., becoming a long-term supplier to the business through its John Dewar & Sons subsidiary.

Brown-Forman and Slane Castle Irish Whiskey

Price: US$50m

One of the most recent high profile acquisitions in the spirits industry was Brown-Forman’s takeover of Slane Castle Irish Whiskey earlier this month. The deal marked the first time the Jack Daniel’s producer entered the Irish whiskey category. Having purchased all shares in the company, Brown-Forman will now invest US$50 million in building a new Irish whiskey distillery on the historic Slane Castle Estate in County Meath, Ireland.

The work is expected to be complete by late 2016, while the distillery will launch new premium and super-premium Irish whiskey brands by the spring of 2017 using third party-sourced liquid. Its range will consist of blended, pot still and single grain variants.

Emperador and Whyte & Mackay

Price: £430m (estimated)

Following on from Diageo’s acquisition of United Spirits, the group decided to sell its Whyte & Mackay Scotch whisky business to ease competition concerns. The company found a buyer in Philippines brandy producer Emperador, part of Alliance Global Group. The group purchased Whyte & Mackay, owner of the Jura, The Dalmore, Fettercrane and Tamnavulin distilleries, for an estimated £430m, gaining access to its 50-country distribution network.

Emperador further showed its commitment to the acquisition trail when just last month it confirmed its bid to acquire Cognac maker Louis Royer for a undisclosed sum. It is not yet known whether for offer was successful.

William Grant & Sons and Drambuie

Price: Undisclosed

After much speculation, William Grant & Sons confirmed in September last year its acquisition of Scotch whisky liqueur brand Drambuie, which had spent almost a century under family ownership. Described as a “very natural addition” to the Glenfiddich maker’s portfolio, Drambuie was purchased by the Mackinnon family in the early 20th century.

Despite a rebranding effort, Drambuie has reported declining sales in the US and Asia over recent years, with William Grant claiming it intends to once again completely rejuvenate the brand. While the business would not officially reveal how much it purchased the brand for, analysts estimated it was worth around £100m.

Campari and Forty Creek

Price: €120m

Italian drinks firm Gruppo Campari entered the Canadian whisky sector with the €120 acquisition of Forty Creek Distillery in March last year. Under the deal, Campari took control of the group’s entire whisky, vodka, rum and liqueur brands, including the flagship Forty Creek Whisky – said to be the fastest growing brand in the Canadian whisky category.

Campari said that the purchase was a “perfect fit” with its acquisition strategy, allowing the group to accelerate growth in the US and Canadian markets. Campari also re-entered the Irish whiskey category last year with the launch of Irish Mist, originally available as a honeyed whiskey liqueur.

Diageo and Don Julio / Jose Cuervo and Bushmills

Price: US$408m

The next spot in this list is jointly occupied by Diageo and Jose Cuervo for their stint of brand swapping in November last year. UK drinks group Diageo agreed to give its Bushmills Irish whiskey to Jose Cuervo in exchange for full ownership of Don Julio Tequila – in which it already owned a 50% stake. The deal also involved the early termination of Cuervo’s contract to produce and distribute Smirnoff in Mexico, handing control back to Diageo, while the UK group also received a lump sum of US$408m upon completion of the agreement.

While many were surprised at the deal, analysts claimed it made “strategic sense”, particularly since Diageo ceased distributing Jose Cuervo’s namesake Tequila after acquisition negotiations turned sour. Meanwhile, Jose Cuervo gains a greater breadth of international distribution markets through the deal.

Quintessential Brands and Lafragette & Legier

Price: Undisclosed

Greenall’s Gin Owner Quintessential Brands took an “important step” in furthering its international growth earlier this year with the acquisition of French spirits producer Lafragette & Legier (L&L). Bought in an undisclosed “multi-million euro” deal, L&L produces a range of Armagnacs, Cognacs, and French vodka, as well as the Alizé fruit liqueur range.

The acquisition also helps Quintessential Brands further implement its “ambitious growth and investment plans”, with L&L giving the group distribution in more than 30 new markets.

Constellation Brands and Casa Noble Tequila

Price: Undisclosed

US drinks group Constellation Brands acquired its first Tequila, Casa Noble, for an undisclosed sum last August. Bought by famed musician Carlos Santana in 2011, Casa Noble gave Constellation footprint in the rising super-premium Tequila category, which it grew by 10% in the US in 2013.

Casa Noble, which is produced from organic blue agave grown in the hills of Jalisco, Mexico, joins Black Velvet Canadian whisky and Svedka vodka in Constellation’s portfolio, and is the company’s first super-premium spirit.