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July 4, 2022updated 20 Oct 2022 1:08pm

Beverage M&A round-up, June 2022 – What Just Drinks thinks

Here’s our analysis of the beverage industry deals that caught our eye in June.

By James Beeson

Pernod Ricard offloads Tormore Distillery to The Whisky Exchange founders’ Elixir Distillers

After a relatively quiet start to the month, beverage industry M&A kicked into life with the news Pernod Ricard is to sell its Tormore Scotch whisky distillery to Elixir Distillers. The deal, struck for an undisclosed sum, will see Sukhinder and Rajbir Singh – the two brothers behind The Whisky Exchange – become the sole proprietors of the Tormore Scotch whisky brand and its Speyside distillery.

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Just Drinks thinks: Could the transfer of the Tormore brand and distillery by Sukhinder and Rajbir Singh have been part of the deal that saw the two brothers divest their specialist e-tailer platform The Whisky Exchange to Pernod Ricard last year? Just Drinks wouldn’t want to speculate…

What is clear, however, is the move pushes Elixir Distillers – to this point a small-scale blender and bottler – firmly into production. Tormore is a sizeable distillery, with an annual capacity of 5m litres per annum, five times that of Sukhinder and Rajbir’s planned Portintruan distillery on Islay, due to open in 2024. The deal also includes aged stock from Tormore, raising the prospect of new releases from a distillery whose releases have fallen into relative obscurity in recent years.

For Pernod Ricard, the deal seems like a relatively sensible piece of portfolio management, with other Scotch whisky brands in its Chivas Brothers’ division – notably Ballantine’s, The Glenlivet and Aberlour – firmly higher up in its list of priorities.

More on this topic: “The drinks industry’s been a very late adapter to e-commerce” – Just Drinks speaks to The Whisky Exchange joint-MD Sukhinder Singh

Sapporo to buy US craft beer maker Stone Brewing

Sapporo Holdings has snapped up US craft beer maker Stone Brewing for SGD165m. The Japanese drinks major said it has plans to produce its beers for US distribution in Stone Brewing’s factories in California and Virginia. The group said it intends to brew 360,000 barrels in the US by the end of 2024, a level it said will “essentially double Stone Brewing’s current production”.

Just Drinks thinks: Bucking the trend that has seen craft breweries tossed aside like unwanted toys in recent times, Sapporo Holdings has made a significant statement by snapping up the ninth-largest US craft producer in Stone Brewing.

The San Diego brewery may well be facing its own financial woes, but this hasn’t put off Sapporo, which sees Stone as an attractive proposition both in its own right and as a base from which to kick on sales of its own beers in the US market (a wise move given the long-term decline in beer volumes in its domestic market). The Japanese drinks major had been keen to add to its Anchor Brewing brand stateside, and in Stone has found a brewery with bi-coastal brewing capacity, a loyal fanbase and, crucially, a willingness to sell-up shop.

For Stone, the sale is a contraction of the “anti-sell-out” stance of its outspoken chairman, Greg Koch. It’s no surprise, therefore, to hear that he will step away from the company “soon” after a near 30-year career. Koch set out in a lengthy blog why he had agreed to sell the business.

More on this topic: Beer helped fuel the rise of RTDs. How can it strike back?

Diageo bolsters experiential credentials with “What’s Your Whisky” tech buy

Diageo has bought the company behind the technology for its digital ‘What’s Your Whisky’ platform for an undisclosed sum. The deal sees the London-headquartered spirits giant become the sole owner of Vivanda – a customer engagement services platform for the food and beverage industry.

Just Drinks thinks: Beverage brands have been stepping up efforts to provide customers with more immersive and dynamic consumption experiences in recent times. The trend accelerated by the need to drive engagement digitally during the pandemic – has seen marketeers across categories shift their focus from storytelling and towards offering personalised drinking experiences.

The goal of experiential marketing is to deliver the consumer with a memorable and unique interaction that will linger on after the consumption occasion has passed, thus driving loyalty and repeat custom. From this standpoint, Diageo’s decision to invest in a company it has already worked with in an intimate capacity – makes sense.

Buying up Vivanda and its FlavorPrint technology also presents the Smirnoff-brand owner with the opportunity to build on the success of its ‘What’s Your Whisky’ platform – which has already rolled out in 21 markets – in other drinks categories. Early days yet but this could be a shrewd acquisition.

More on this topic: How to monetise the metaverse

Moët Hennessy buys California winery Joseph Phelps Vineyards

Moët Hennessy has struck a deal to buy Napa Valley winery Joseph Phelps Vineyards. The transaction sees the luxury wines and spirits division of LVMH acquire a portfolio of red wines that includes the flagship Insignia label, as well as 500 acres of vines in Napa Valley and Sonoma County. Joseph Phelps is the latest in a slew of Napa estates to be snapped up – earlier this month Silverado Vineyards was bought by Foley Family Wines, while Treasury Wine Estates moved for Frank Family Vineyards in November last year.

Just Drinks thinks: Buying upmarket assets during a time of significant inflation and pressure on consumer spending could raise eyebrows, but Moët Hennessy clearly believes demand for premium wines will remain resilient. CEO Philippe Schaus told CNBC that the return of travel and pent up demand meant US wine was in for a bumper summer, but advised caution amid an unpredictable landscape. “After the summer, we could see a different situation. It’s hard to predict inflation and prices,” he added.

On the face of it, Joseph Phelps Vineyards looks like a solid buy – the estate has risen, thanks to the popularity of its the flagship Insignia brand, to become one of California’s most critically acclaimed wineries. With multinationals splashing the cash to buy-up family owned estates in the region with abandon, Moët Hennessy has chosen to beef up its US wine roster with a big name firmly at the premium end of the spectrum.

More on this topic: The rise of the hybrid in wine

Other notable deals in the global beverage industry this month:

Moët Hennessy buys California winery Joseph Phelps Vineyards

Atlantic Grupa to sell Serbian production site to Vik Pro Univerzal

Modern Times sale to Brewery X for $20m gets green light

Heineken to take control of Taiwan’s Long Chuan Zuan Co.

Foley Family Wines buys former Disney family owned Silverado Vineyards

The Sazerac Company buys Lough Gill Distillery to house Irish whiskey portfolio

Les Grands Chais de France makes two acquisitions in Chile

Further data: Beverage industry deals total $101.3m globally in May 2022

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Understand the impact of decreasing sugar consumption on the F&B market

Growing consumer concern regarding health and wellbeing has increased the focus on reducing sugar consumption. This has driven food and beverage manufacturers, alongside governments, to take measures to meet this challenge. In addition, the pandemic heightened the focus on self-care, including implementing healthy eating to support the immune system. Now more than ever, consumers are paying attention to the amount of sugar and calories in the products they purchase. Access GlobalData’s new whitepaper, The Sugar Reduction Challenge – Past, Present and Future Outlooks within Beverages, to better understand the recent trends in sugar demand, how manufacturers and governments have responded to the challenge, and what solutions are available to the industry. The white paper covers:
  • The key factors behind the recent trends in sugar consumption
  • What is driving consumer choices when shopping for food and beverages?
  • How companies and governments are stepping up their efforts to meet consumers’ expectations
  • The outlook for sugar demand
  • Which ingredients stand to benefit from these future developments?
Enter your details here to receive the free whitepaper.
by GlobalData
Enter your details here to receive your free Whitepaper.

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