FDBusiness.com

Diageo Strengthens its Global Position in Tequila by Selling Bushmills

 Breaking News
  • Sweets and Snacks New Product Development Thrives on Adventure and Bite-size Trends With one in four global consumers increasing their consumption of confectionery over the past year (Innova Market Insights Consumer Survey, 2018) because “there is more variety & novelty available,” the food industry is responding. New data from Innova Market Insights finds a 15 percent average annual growth in global confectionery launches with a “discovery” claim [...]...
  • 80,000 Tonnes of Skimmed Milk Powder Sold in Biggest Tender A total of 80,424.05 tonnes of the skimmed milk powder bought into public stock by the European Commission since 2015 were sold in the latest tender sale, bringing the remaining stock to around 22,000 tonnes out of the original 380,000 tonnes, stockpiled since the crisis that hit the dairy sector in 2015. In effect, almost [...]...
  • Müller Rolls Out ‘Stealth’ Milk Caps Müller, Britain’s leading producer of branded and private label fresh milk, cream, butter and ingredients, is rolling out a new lightweight recyclable milk cap, which uses 13% less plastic material. The innovative solution allows the business to remove 300 tonnes of plastic every year, the equivalent weight of 231 million ‘stealth’ milk caps. The dairy company has [...]...
  • Greene King Announces New Chief Executive The board of Greene King has announced that Nick Mackenzie will join the board on 1st May 2019 as chief executive in succession to Rooney Anand. Nick Mackenzie will be joining from Merlin Entertainments where, as a member of the executive committee, he is responsible for the Midway portfolio of attractions, which comprises over 100 [...]...
  • Irish Grocery Market Hits Festive Record as Retailers Cash in on Christmas The Irish grocery market grew by an impressive 3.0% over the 12 weeks to 30 December, ensuring a record festive period for retailers. The latest Kantar Worldpanel data shows value sales reached €995 million in the month of December – the highest monthly total ever recorded in the Irish grocery market. This was driven by [...]...

Diageo Strengthens its Global Position in Tequila by Selling Bushmills

Diageo Strengthens its Global Position in Tequila by Selling Bushmills
November 03
12:02 2014

Diageo has agreed with Casa Cuervo, the Mexican tequila and spirits group, the acquisition of full global ownership and control of Tequila Don Julio and the early termination of Casa Cuervo’s production and distribution agreement for Smirnoff in Mexico. In return, Diageo has reached an agreement to sell its Bushmills Irish whiskey business to Jose Cuervo Overseas. The transaction will result in a net payment of $408 million to Diageo upon completion, which is expected in early 2015 subject to certain approvals.

The transaction is expected to be economic profit break-even in year 3 assuming a WACC rate of 9%. Assuming completion of the transaction in early calendar 2015 and the use of the net proceeds to reduce debt at Diageo’s average rate of interest, the transaction will dilute eps by 0.6% in the year ending 30 June 2015.

Ivan Menezes, Chief Executive of Diageo, comments: “This transaction delivers two key objectives for us. We have secured our position in the growing super and ultra-premium segments of the tequila category and further strengthened our global footprint by expanding our leading position in Mexico where the growth of spirits has great potential. Diageo has realised this opportunity through the breadth and depth of our portfolio. It delivers our strategy: to build our presence in the world’s fastest growing markets and lead the industry in the biggest growth opportunities. I am delighted we have reached this agreement.”

BushmillsDetails of the component parts of the transaction are confidential. Smirnoff volume and net sales in Mexico in the year ended 30 June 2014 were 285,000 cases and £9 million respectively. Bushmills volume and net sales in the same period were 800,000 cases and £57 million. Tequila Don Julio had volume and net sales of 590,000 cases and £105 million, of which Diageo accounted for 345,000 cases and £75 million net sales, in the year ended 30 June 2014.

The Tequila category is nearly 27 million 9L cases globally with estimated retail sales of $6 billion having grown at a CAGR of 7.8% value over the last four years.  Ultra-premium tequila, where Don Julio is the market leader by value, is the fastest growing price segment within the category, posting 29% CAGR over the last 4 years (IWSR value data 2009- 2013) and over 57% growth in the last year (IWSR 2013).

In the US, ultra-premium tequila is expected to account for over half of total category value growth over the next six years. Tequila is the third largest spirits category in the US and the largest spirits category in Mexico representing over a third of spirits value share.

About Author

mike

mike

Related Articles



Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • June 18, 2019Multimodal 2019
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

Subscribe Here



Advertisements