Campari CEO touts Bourbon potential after Wilderness Trail Distillery deal 

Campari has moved to make Bourbon “the second major leg” of its group portfolio, after announcing a $420m deal to acquire 70% of Kentucky’s Wilderness Trail Distillery. 

The deal gives the Aperol brand owner the option to purchase the remaining 30% of the Bourbon maker in 2031. 

The transaction implies an enterprise value of $600m, making it Campari’s second biggest M&A deal to date, behind the 2016 acquisition of Grand Marnier. 

Speaking to Just Drinks, Campari CEO Bob Kunze-Concewitz said the brand “perfectly complements” the group’s existing US whiskey range. Wilderness Trail will join a Bourbon portfolio spearheaded by Wild Turkey, acquired in 2009. Campari also has the “ultra-premium” Whisky Barons Collection, while it acquired a minority stake in flavoured whiskey brand Howler Head earlier this year. 

Kunze-Concewitz said the additional capacity Wilderness Trail’s distillery would bring on board was a key attraction. 

“American whiskey is a huge category that is growing very fast. Currently, it accounts for 14% of the US market, which is a number one priority for us,” he said. “This brand is new in the market and perfectly complements our portfolio. Separately, though, what else attracted us was not only the brand but the distillery. It’s a state-of-the-art distillery, currently with 85,000 cases at capacity, which will increase down the road to 125,000.” 

Kunze-Concewitz added: “Wild Turkey will continue to be produced at the Lawrenceburg Wild Turkey distillery and the same with Russell’s Reserve. But we’ve acquired a nice stake in Howler Head and we’ve got our RTD business. Clearly, being able to increase capacity makes it [Wilderness Trail] very attractive.” 

Based in Danville in Kentucky, Wilderness Trail was founded in 2012 by Shane Baker and Dr. Pat Heist. The company released its first products – Wilderness Trail Bourbon and Wilderness Trail Rye Whiskey – six years later. In 2021, the business achieved net sales of $40.8m, a figure expected to rise by 39% in 2022.  

Kunze-Concewitz said: “American whiskey will become the second leg for our company. Clearly, aperitifs are very important and make up 45% of our sales currently. American whiskey is 11% and we see that developing significantly in the years to come.” 

Earlier in October, Campari acquired a minority equity stake in global beverage incubator Catalyst Spirits – just months after investing in its Howler Head Bourbon brand. 

Brown-Forman makes acquisitions in rum, gin 

Brown-Forman completed two high-profile acquisitions in a matter of weeks, agreeing deals to buy Diplomático Rum and Gin Mare. 

October’s deal for Venezuelan rum brand Diplomático Rum marked Brown-Forman’s entry into the rum market. It came a month after the US giant moved to bolster its position with gin, snapping up the Spanish gin brand Gin Mare. 

According to a securities filing, Brown-Forman agreed to pay Diplomático owner Destillers United Group $725m for the assets, which also included the Botucal rum brand. The financial terms of the Gin Mare deal were not disclosed. 

Brown-Forman CEO Lawson Whiting said Diplomático would give the company “a market-leading entry into the fast-growing super-premium rum category”.  

Destillers United Group will continue to produce and age Diplomático at the original distillery at the foot of the Andes Mountains. The deal also includes a production facility in Panama, Brown-Forman added. 

Until the agreement to buy Gin Mare, Brown-Forman’s presence in gin centred on the London Dry brand Fords Gin. The Jack Daniel’s maker described Gin Mare as “the world’s number one, ultra-premium gin”. 

Whiting added: “Gin Mare and Gin Mare Capri are unique gin brands with impressive sales growth and strong distribution in important European markets. We believe this exciting acquisition enhances our capacity to deliver meaningful global growth for the long term.” 

Brown-Forman acquired Gin Mare from two distillers – Vantguard and MG Destilerías. Gin Mare was founded in 2010 by the Giró family behind MG Destilerías, as well as Alfonso Morodo and Antonio Pardo of Vantguard. 

The gin will continue to be produced at MG Destilerías in Vilanova i la Geltrú, a fishing village in Spain. 

Just Drinks analysis: Forget recent M&A: Brown-Forman’s shrewdest investment may prove to be in single malt 

Pernod makes hat-trick of moves in North America 

Pernod Ricard made a trio of corporate announcements last month centred around the US and Mexico. 

On 12 October, the French group announced some financial backing for the sotol brand Nocheluna, though it did not buy equity in the business. 

A day later, Pernod Ricard said it had “significantly” increased its existing minority shareholding in US wine-and-spirits business Sovereign Brands. 

And, on 18 October, the wine-and-spirits major moved to expand its presence in Tequila, taking a majority stake in the Código 1530 brand. Terms were not published. 

Nocheluna is a sotol brand owned by Mexican spirits group Casa Lumbre. The transaction will see Pernod support the launch of the spirit into international markets, starting with the US. 

It was the third deal between Pernod and Casa Lumbre in two-and-a-half years. Last year, Pernod bought a minority stake in another Casa Lumbre brand – Mexican corn whisky Abasolo. In 2020, it also invested in Ojo de Tigre mezcal, another Casa Lumbre spirit. 

Pernod’s acquisition of the majority of Código 1530 is a way of bolstering the company’s position in the upper end of the Tequila category, it said. Within the Código 1530 Tequila portfolio, its Blanco product starts at an SRP of $50. The brand sells its Añejo and Extra Añejo variants for $350. 

“We are incredibly excited to welcome Código 1530 into our portfolio, enhancing our agave products offer, especially in its upper segment where consumers and connoisseurs are eager to discover brands that combine strong roots with the most exclusive quality,” Ann Mukherjee, the CEO of Pernod Ricard’s US arm, said. “Thanks to our newly-enhanced portfolio, we have never been more confident to lead the growth of the spirits’ industry within the US market.” 

Pernod, meanwhile, said its further investment in Sovereign Brands would increase its profit from recurring operations by around 3% on a full-year basis. Financial terms were not disclosed. 

The Martell brand owner first bought a stake in Sovereign Brands last year. Citing the progress made in the past twelve months, Pernod pointed to an acceleration in the sales of brands within the Sovereign Brands portfolio, including French sparkling wine Luc Belaire (1m nine-litre cases sold in 2021) and range of Caribbean rums sold under the Bumbu brand (300,000 nine-litre cases sold last year). 

The two companies are also planning to launch an unnamed brand from a joint incubation project in the coming months. 

Big food and beverage firms set to miss plastic sustainability targets 

A progress report on big food and drink companies’ attempts to make their plastic packaging more sustainable by 2025 suggests many of them are likely to miss their targets. 

The report, from The Ellen MacArthur Foundation (EMF) and the United Nations Environment Programme, also revealed some companies are using more virgin plastic despite a pledge to reduce its use. 

Following the report’s release, environmental campaign group Greenpeace said the findings show “voluntary commitments from companies to address plastic pollution have failed”. 

In 2018, under the auspices of the EMF, many of the world’s largest FMCG companies signed up to a plan that carried a headline pledge that 100% of plastic packaging would be reusable, recyclable or compostable by 2025. 

Today’s progress report revealed PepsiCo increased its use of virgin plastic by 5% between 2020 and 2021. Meanwhile, Coca-Cola upped its use by 3% and food giant Mars by 11%. 

Amongst the other top ten largest FMCG firms by revenue that are signatories to this commitment, Nestlé and Unilever decreased their usage of virgin plastic over the same period, by 8% and 18% respectively. They both increased their use of post-consumer recycled plastic (PCR) year-on-year, by 4.4% and 17% respectively. 

PepsiCo and Coca-Cola also increased PCR usage, by 3.3% and 4.6% respectively. 

The report’s authors said: “While strong progress is being made in some areas, key 2025 targets are expected to be missed. 

“The target of 100% reusable, recyclable or compostable plastic packaging will almost certainly be missed by most organisations with flexible packaging and lack of infrastructure being the main barriers. 

“Around 16% of signatories’ packaging is flexible packaging, such as sachets and films, a packaging category that is increasingly unlikely to meet recyclability in practice and at scale by 2025.” 

The first global plastics treaty is to be discussed in Uruguay this month with some UN members pushing for a pact that includes legally binding targets to increase the recycled content in packaging. 

For further coverage, click here.

An M&A one-two from Diageo 

Diageo was another major spirits group to announce two acquisitions in around a month. 

In late September, the UK-based group bought cold-brew coffee liqueur producer Mr Black, an Australia-based business in which it already owned a minority stake. 

Five weeks later, Diageo unveiled the purchase of American single malt whisky producer Balcones Distilling. 

The financial terms for both transactions were undisclosed. 

Mr Black operates a coffee roastery in Sydney, where it produces a coffee liqueur using a cold-brew process. The company was founded in 2013 by designer Tom Baker and distiller Philip Moore.  

Mr Black has grown its foothold in the coffee liqueur category and is available in 22 countries. While prominent in Australia and the UK, its largest market is the US. 

The deal for Balcones Distilling, set up in 2008, is Diageo’s first full-scale acquisition in American single malt. Diageo also has a minority investment in Westward Whisky via its Distill Ventures accelerator. 

Distill Ventures was also the vehicle through which Diageo bought its initial stake in Mr Black.  

Announcing the full acquisition, Claudia Schubert, the president of Diageo’s business in North America, said: “We believe Mr Black is just getting started in the dynamic coffee-liqueur segment. This acquisition is in line with our strategy to acquire high-growth brands in exciting categories.” 

She described Balcones Distilling as “true innovators and pioneers in the emerging American Single Malt and Texas whisk(e)y movements”. 

Balcones Distilling sold more than 15,000 nine-litre cases (according to Nielsen data cited by Diageo) in 2021 and is available nationally in the US, as well as in 11 international markets including the UK. Its products include Lineage American Single Malt and Baby Blue Corn Whisky. 

It will join Bulleit, the Kentucky Bourbon brand, in Diageo’s US whisk(e)y roster. 

Deal done with The Wine Group as Constellation sells more wine assets 

Constellation Brands has offloaded another batch of wine labels, with US peer The Wine Group snapping up the assets. 

The deal involved what Constellation called “a portion of its mainstream and premium wine brands”. The wines include the Cooper & Thief, 7 Moons and The Dreaming Tree brands. 

For its part, California-based The Wine Group said the acquisition was an “expansion and diversification into premium and premium-plus categories, as well as the luxury category”. 

Financial terms were not disclosed. 

Last year, Constellation offloaded a chunk of its “popular and mainstream” wine-and-spirits business to US peer E&J Gallo. 

The Corona beer maker said the latest disposals were part of a strategy to compete “predominantly in premium and fine wine and craft spirits”. It added it will continue to invest in what it called its “remaining strategic mainstream wine-and-spirits assets”. Those brands include Woodbridge wine and Svedka vodka. 

The Wine Group, which has a stable of brands including Benziger Family Winery, Concannon Vineyard and Franzia, added the purchase meant it moved from being the third-largest wine company in the US in revenue to the second-biggest. It does not disclose its sales. 

Later in October, Constellation moved to reduce its exposure to cannabis, with the Modelo brand owner set to convert its common stock holding in Canopy Growth into new exchangeable shares in the Canadian firm. 

The move is being facilitated by a restructuring at Canopy, with the company announcing it is to consolidate its US cannabis assets into a single entity – Canopy USA. 

Constellation intends to change its existing common shares ownership interest in Canopy into new exchangeable shares in the holding company, a decision it says will protect “Constellation shareholder value while retaining an interest in Canopy Growth through non-voting and non-participating shares”. 

In a statement, the group said the move was “aligned with Constellation’s focus on core beer and wine and spirits businesses and capital allocation priorities”. 

The Casa Noble Tequila brand owner initially invested in Canopy in 2017 for $191m, later upping its stake to 38.6% with a $4bn share purchase. However, the investment has not paid off, with Canopy struggling financially and federal marijuana legalisation in the US stalling.