Diageo seeks ‘bolt-on’ spirits acquisitions

15th May, 2017 by Amy Hopkins

In addition to investing in nascent spirits brands through its Distill Ventures unit, Diageo will “continue to look for bolt-on acquisitions,” the group’s CFO has told investors.

Diageo “continues to monitor” its portfolio and is looking for complementary bolt-on acquisitions

In a presentation to investors last week, Kathryn Mikells, chief financial officer at Johnnie Walker maker Diageo, said the group “continues to monitor” its portfolio.

Last year, Diageo exited the wine business – a “non-core asset” – with a number of sell-offs.

The most significant full acquisition the firm has made in recent years has been that of Don Julio Tequila, which Diageo bought from Jose Cuervo in 2015 in exchange for giving the Mexico-based firm its Bushmills Irish whiskey brand.

Diageo has also made a number of minority stake acquisitions through its Distill Ventures subsidiary – a start-up spirits investment business and growth accelerator.

Through Distill Ventures, Diageo has invested in Belsazar vermouth, Danish distillery Stauning, Australian whisky producer Starward and alcohol-free distilled ‘spirit’ Seedlip.

Also during the investor conference, Ivan Menezes, CEO of Diageo, said Distill Ventures has “a few more” incubator brands “in the pipeline”.

“Across the world, but particularly in the US, we are seeding new brands to gauge consumer reactions with the aim to disrupt categories,” he said.

“We have the capabilities to do that ourselves or through our incubator program: Distill Ventures. Some of these brands are new to world, some others are existing brands that we are patiently developing and that are looking very promisingly: such as George Dickell, a Tennessee whiskey.

“We have done that across categories: in rum, mezcal, US whiskey, Scotch, Australian and Danish whiskies and there are a few more in the pipeline.”

Menezes added that these investments show how Diageo “can use consumer insights that we gather through our scale business to innovate with the pace and agility typical of smaller craft spirit players”.

Since launching in 2013, Distill Ventures has screened more than 3,000 entrepreneurs to secure 14 seed investments.

“F17 has seen huge growth for Distill Ventures – increasing its portfolio and expanding into North America, 
arguably the world’s most exciting craft spirits market,” added Menezes.

“This is a very effective way to leverage the entrepreneurial interest in the spirits industry, allowing us to act 
with pace when we spot a brand has the potential to surprise.”

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