FDBusiness.com

Diageo Strengthens its Global Position in Tequila by Selling Bushmills

 Breaking News
  • Chivas Brothers Opens New Head Office Chivas Brothers, the Scotch whisky business of Pernod Ricard, has opened a new 27,000 sq ft head office in the centre of Glasgow. Jean-Christophe Coutures, chairman and chief executive of Chivas Brothers, says: “We need to keep moving with the times and this is the beginning of a new and exciting chapter for Chivas Brothers [...]...
  • Unilever Achieves 100% Renewable Electricity Across Five Continents Unilever has announced that its factories, offices, R&D facilities, data centres, warehouses and distribution centres across five continents are now powered by 100% renewable grid electricity. As far as possible, Unilever’s transition to renewable electricity has been delivered through supporting the development of local renewable energy markets, with 38% of its grid electricity supplied through [...]...
  • Landmark Court Ruling Opens the Way For Launch of Signum® by Quinn A recent landmark patent ruling has heralded the launch of Signum® by Quinn, a mono PET plastic tray.  The arrival of Signum® by Quinn follows a long and successful patent challenge by Irish plastic packaging manufacturer Quinn Packaging, against patents held by Klöckner Pentaplast and Faerch. In July the Intellectual Property Enterprise Court (IPEC) in [...]...
  • Danish Crown Presents its New Brand Identity Farmer-owned Danish Crown is setting a new direction towards a more sustainable future from farm to fork. A new brand and narrative will make it clearer to customers and consumers that Danish Crown has started this transformation. At the same time, Tulip Food Company is to change its name to Danish Crown Foods. Danish Crown plans [...]...
  • Lantmännen and Yara Lead the Way Towards World’s First Fossil Free Food Chain Lantmännen, the Nordic region’s leader in agriculture, machinery, bioenergy and food products, and Yara, thespecialist in agricultural products and environmental protection agents, are taking a pioneering role in the transformation of the food system. The partners will launch a pilot project with the ambition to introduce the world’s first certified fossil free food chain. This move [...]...

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

  • October 1, 2019PPMA Total Show
  • October 17, 2019Future Food-Tech
  • November 18, 2019Plastics Caps and Closures Conference 2019
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

Subscribe Here



Advertisements