Constellation Brands acquires High West Distillery
Constellation Brands Inc. has acquired craft whiskey producer High West Distillery for around US$160 million, at the same time reporting strong sales for the second quarter of its financial year.
Attributing its growth largely to the success of its beer business, the Svedka Vodka maker saw a 17% jump in quarterly sales to US$2.02 billion, up from US$1.73bn one year earlier.
Net income attributable to the company rose to US$359 million, or $1.75 per share, from US$302.4 m and US$1.49 per share.
“The strong consumer demand for our portfolio continues to propel our business – during the quarter, we gained share and improved margins across our business, while continuing to make smart investments designed to fuel growth today and in the future,” said Rob Sands, president and chief executive officer, Constellation Brands.
“I am proud of our accomplishments in the first half of the year, which are enabling an increase in our overall guidance for the year.”
The acquisition of High West Distillery – Utah’s first distillery since 1870 – bolsters Constellation’s strategy to increase its premium focus in the US while at the same time enabling the firm to enter the fast-growing Bourbon and rye categories.
The distillery has seen double-digit volume growth year on year for the past three years, and now sells approximately 70,000 nine-litre cases annually.
High West’s portfolio includes four core products: American Prairie Bourbon, Double Rye!, Rendezvous Rye and Campfire – the only blend of Scotch, bourbon and rye whiskeys on the market. In addition, the distillery produces several limited edition whiskeys.
“High West’s whiskeys are high-end, distinctive and delicious – perfect for today’s knowledgeable consumer who enjoys artfully crafted whiskeys,” said Bill Newlands, president, wine and spirits division, Constellation Brands.
“With the addition of High West, Constellation Brands bolsters its position in the dynamic and growing craft spirits category. We look forward to welcoming this creative and talented team to Constellation Brands as we work together to drive growth for High West and build our premium spirits portfolio with brands that consumers love.”
As part of the deal, Constellation is set to help fund the expansion of the 30,000-square foot distillery and visitor’s centre, adding a second still capable of producing around 50,000 cases of whiskey a year.
Additionally, the distillery’s 200 employees will remain within the company. High West founder David Perkins will continue to serve as a brand ambassador and work on the product along with master distiller Brendan Coyle.
High West chief executive John Esposito will continue to run the business, working alongside Newlands in building Constellation’s spirits stable.
“Our award-winning whiskeys are artfully blended to create unique and complex flavors inspired by the Old West,” said Esposito.
“We craft innovative whiskey blends that reflect our sense of adventure and pioneering spirit. When it came to the next step for High West, we wanted to work with the right partner that will help us grow further while maintaining our culture and core values.
“With the strength of the Constellation Brands team, we will be able to reach more consumers and continue our track record of innovation.”
The transaction is expected to close by the end of October.