The spirits industry continues to be stirred up as another big drinks group, Bacardi, scoops up leading tequila maker Patron.
Tequila has been a hot property of late. The Bacardi deal, valuing Patron at $5.1 billion, comes on the heels of French drinks group Pernod Ricard buying premium brand Avion Tequila. Last summer North Carolina-based Diageo, the world’s largest spirits producer, made a deal to acquire George Clooney’s premium tequila brand, Casamigos, for $1 billion.
Though still largely a North American phenomenon, tequila sales are growing faster than the alcoholic drinks sector overall, perhaps bolstered by its relatively new image as a high-end indulgence. According to research firm IWSR, global tequila sales rose 5.2% in 2016, while the overall market for alcoholic drinks fell 1.3%. Premium brands are performing better than their mass-market counterparts, revealing a consumer trend towards more expensive drinks.
Founded in Cuba in 1862 and headquartered in Bermuda, Bacardi is the world’s largest privately held, family-owned spirits company. It has a strong portfolio of more than 200 brands and labels, including Bombay Sapphire gin and Grey Goose vodka, with sales in more than 150 countries. Bacardi has owned a minority stake in Patron since 2008, Reuters reports.
The Patron acquisition will be the first major deal for Mahesh Madhavan, who was appointed Chief Executive of Bacardi in October 2017. It suggests that Madhavan is looking to grow in the U.S., specifically in the higher-growth premium brand category, as well as expand Patron distribution globally, according to Jefferies analysts, who noted that the deal could “make life a little tougher in the United States” for publicly traded spirits companies. The deal is expected to close in the first half of the year.
