GLOBAL: Diageo signals move into high-end Bourbon
Diageo CEO Ivan Menezes argues the group is strong in the North American whiskey sector
Diageo is set to bolster its interest in Bourbon with new premium launches, but the group's CEO has not ruled out acquisitions in the thriving, wider category.
The company is planning to launch a number of “limited, high-end” North American whiskies early next year under the name 'Orphan Barrel', which will sell at around around $75-$125 a bottle. Brands that will be sold as part of the concept include Barterhouse and Old Blowhard.
“People think we are weak in North American whiskey,” Diageo CEO Ivan Menezes told reporters following an investors day in London yesterday (19 November). “But we are the co-leaders, with 23% share - it's Brown-Forman and ourselves.” In the North American whiskey category, the group already has Canadian blend Crown Royal, Bulleit and George Dickel.
Menezes, who replaced Paul Walsh as the group's CEO in July, said Bulleit is likely to have sold 600,000 cases this year and believes the brand can get to annual sales of a million cases.
But Menezes did not rule out a bid to buy other assets in the category. “If we had the right Bourbon brands to add to the portfolio we could do it and we would look at it,” he said. The company has long been cited as a candidate to acquire Jim Beam and Maker's Mark producer Beam Inc.
Menezes also dismissed the idea that the US craft distilling movement is a threat to his company. “I see the craft phenomenon as good for drawing people into spirits and away from beer and wine,” he said.
Meanwhile, the CEO confirmed that Diageo's Tequila brand Don Julio has now launched in China “in a small way” following the lifting of restrictions on high alcohol Tequila earlier this year. However, he said the brand is unlikely to be a “big play” in China, as the group's primary focus remains Scotch whisky in the region.
On wider M&A potential, Menezes said the group would not continue at the pace it has done in emerging markets in the last three years, where it has spent around GBP3bn (US$4.8bn) on acquisitions. But he added: “We still have places we're looking at and we're going to stay active and aggressive.” He flagged Africa as a target for further possible beer acquisitions.
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