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Diageo to buy Don Papa for €260m
Captain Morgan owner Diageo has agreed to acquire Philippine rum brand Don Papa for an initial €260 million (US$281.5m).
The deal would also see Diageo pay up to €177.5m (US$192.2m) through to 2028, depending on the brand’s performance.
The super-premium-plus rum segment increased by a compound annual growth rate (CAGR) of 18% in Europe and 27% in the US between 2016-2021, according to IWSR data cited by Diageo.
During the five-year period, Don Papa outperformed the market in Europe, with a CAGR of 29%.
Diageo’s rum portfolio includes spiced rum Captain Morgan, Guatemalan brand Ron Zacapa and Cuban brand Ron Santiago de Cuba, the latter of which it distributes internationally.
In August last year, Diageo-backed incubator Pronghorn made its first investment in Caribbean rum brand Ten to One, co-owned by American singer Ciara.
John Kennedy, president, Diageo Europe and India, said: “We are excited by the opportunity to bring Don Papa into the Diageo portfolio to complement our existing rums.
“This acquisition is in line with our strategy to acquire high-growth brands with attractive margins that support premiumisation, and enables us to participate in the fast-growing super-premium-plus segment.”
Launched in 2012 by entrepreneur Stephen Carroll and Andrew John Garcia, Don Papa Rum is currently available in 30 countries. France, Germany and Italy are the brand’s largest markets.
The rum is distilled and aged in American oak barrels on the island of Negros Occidental, known locally as ‘Sugarlandia’. The rum carries flavours of vanilla, honey and candied fruits.
Carroll, who will remain with the brand and work alongside Diageo, added: “Diageo has a strong track record in nurturing founder-led brands. They believe in our unique story and have genuinely embraced our brand idea.
“We believe this acquisition is a great opportunity to take Don Papa into the next exciting chapter of its development.”
The acquisition will be funded through existing cash reserves and is expected to close in the first half of 2023.
The company said it would be able to discuss the deal in more detail after the release of its fiscal 2023 financial results on 26 January.