How will Lucas Bols fare with its IPO?

How will Lucas Bols fare with its IPO?

Dutch spirits firm Lucas Bols has endured an occasionally turbulent time in its 450-year history. Will an effort to list on the Euronext Amsterdam through an IPO bolster the company? Here, our spirits columnist Richard Woodard examines the group's history for answers. 

It's funny how an apparently workaday press release can trigger the most vivid of memories. On hearing that Dutch spirits and liqueurs maker Lucas Bols is to launch a EUR125m IPO, I was instantly transported back nearly 12 years to a sunlit, waterfront location in Rotterdam.

Three years earlier, Bols had been bought by Rémy Cointreau for EUR510m and, led by new CEO Huub van Doorne, the company was betting big on future success. The Rotterdam festivities heralded phase one of a EUR25m plan to catapult Bols into the top 15 international spirits brands. Within three years.

The centrepiece was Bols, a 93ft ocean racing yacht designed to break world records and capable of covering 500 miles a day. Purpose-built, jaw-droppingly huge and as sleek as an otter in a velvet smoking jacket, Bols remains the coolest and most extravagant billboard I’ve ever seen in the drinks industry.

But within two years, that day in the Rotterdam sunshine looked laughably optimistic at best – and hubristic at worst.

Did things start to unravel when Bols vodka, which had come from nowhere to lead the Polish market in the space of a decade, suffered a blip in sales? Or maybe it was the weakening of the dollar, or a reassessment of corporate objectives? Either way, Rémy lost its nerve.

In 2005, it concocted a labyrinthine deal under which CEDC got the rights to make and sell Bols vodka in Poland and Russia, in return for equity and a seat on the CEDC board. Given its heavy reliance on Eastern Europe, this was tantamount to selling the whole vodka brand, and split the Bols business down the middle.

Later that year, Rémy cut its losses entirely, putting the entire company on the block. Bols was sold three months on in a EUR210m buy-out, with 75% of the equity going to private equity fund ABN AMRO Capital, and 25% to van Doorne.

From EUR510m takeover and EUR25m masterplan to EUR210m MBO in the space of a few years, it’s some reversal of fortune (even allowing for the fact that Rémy kept Metaxa, a Bols acquisition from 1999). But, delve into the history of Bols and you’ll discover it’s nothing new.

It all started in t’Lootsje, the “little shed” on the outskirts of Amsterdam that housed the first Bols distillery when the family arrived in the city in 1575 – the basis of Bols’ claim to be the world’s oldest distilled spirit brand. By 1813, the family’s male line had ended, and an ownership merry-go-round started which was to endure for two centuries (so far). Successive private owners built the business, expanding internationally until Bols went public for the first time in 1954.

Forays into Italian aperitifs, mineral waters and soft drinks followed, until the formation of a joint venture with Heineken’s wine and spirits arm in 1989 under the Bols Benelux banner. With a dominant share of the local market, the new entity diversified into wine, buying businesses in Bordeaux and northern Italy.

Then, the recession hit and, in 1993, Heineken sold off its stake, triggering a frankly disastrous period for the company. First of all, Bols got into bed with food business Royal Wessanen in 1993 – but swiftly found that integrating the two contrasting businesses was no easy task.

By 1999, both parties had bowed to the inevitable. Cue another MBO, with the help of private equity firm CVC Capital Partners. Despite acquiring Metaxa and Asbach from Diageo, the new company was isolated in an increasingly consolidating industry. Step forward Rémy, and we’re pretty much up to date.

Is Bols cursed?

In the course of the past 60 years, the company has tried private ownership, two MBOs and going public (for the second time with the new IPO). It’s hard to escape the conclusion that it could all have been different, had Rémy given the business more time – or had it not decided to run too far too fast in the first place.

How will this IPO succeed where previous restructuring efforts have failed, especially given that Bols is a smaller business than it was when Rémy took it over, operating in an even more consolidated industry?

Van Doorne’s efforts to shift the focus back onto what Bols does best might help. His vision is to marry innovation to the company’s unrivalled heritage, pushing its world-leading (outside the US) liqueurs range alongside the genevers, which will look to jump on the back of the gin renaissance. No soft drinks, no Italian wine, no German brandy.

Symbolically at least, the return to Amsterdam is also important. When the new Lucas Bols distillery opened in the heart of the city last May, it ended a 45-year absence and signalled a rediscovery of a history dating back 440 years.

I’d often wondered what became of the Bols super-maxi yacht that glistened so proudly in the Rotterdam sunshine back in 2003. Apparently, it was sold to a French team in training for the America’s Cup, then shifted on again last year for EUR650,000 (but only after the price was cut from EUR800,000).

Meanwhile, Bols has seen its annual turnover shrink from EUR120m in 2002 to EUR78.7m in the year to March 2014, shorn of its Eastern European vodka business and acquisitions including Metaxa.

That said, the company claims in its IPO publicity to be asset-light, with a product mix favouring margin over volume.

Sometimes you have to become smaller in order to secure long-term success, and a little more humble in ambition to achieve more distant targets. Let’s hope that Bols can celebrate its 450th birthday, in 2025, in a manner that befits the world’s oldest spirits brand – with patient shareholders and the kind of stability which has been absent from its history for far too long.

For more facts and figures on Lucas Bols, click here