Diageo sold its Guinness brewing operation in Cameroon to France-based peer Groupe Castel. The transaction, struck for GBP389m (US$460.3m), will see Castel take on the local production and distribution of Guinness, while Diageo will remain responsible for the A&P of its flagship beer brand in the market.
Just Drinks thinks: Diageo’s flagship beer continues to see strong momentum across Africa – in its most recent financial results, beer sales were up by more than a fifth in the region – but the London-headquartered group is pursuing what CEO Ivan Menezes describes as an “asset-light” strategy for its beer operations on the continent. Earlier this year,the group agreed a deal to sell its brewery in Sebeta, Ethiopia – also to Castel Group.
The Cameroon deal described as a “licence and royalty agreement” – makes sense, allowing Diageo to take advantage of Castel’s five brewing sites, as well as their national distribution network, to grow volume sales, while continuing to maintain control over A&P investment behind the brand.
More on this topic: Middle classes driving super-premium spirits growth – Diageo CEO
Campari has again added to its spirits portfolio through M&A, snapping up Italian peer Del Professore. The Rome-based Del Professore, set up by bartenders in 2013, will join the Milan-headquartered Campari’s set-up as the group “aims to solidify its position in the super-premium craft vermouth and gin categories”.
Just Drinks thinks: For the second time in a little more than two months, Campari has used M&A to add to its portfolio. Del Professore – a contemporary vermouth and gin maker set up by a group of Italian bartenders – falls more at the modern, craft end of the spectrum than Campari’s other recent buy – the dusty and much-in-need-of-some–TLC bitter liqueur brand Picon.
The purchase strengthens Campari in the super-premium vermouth and gin segments, giving it a plug-in-and-play option that won’t require any sort of significant facelift to hit the ground running. Spirits category commentator Richard Woodard agrees, going as far as to compare the investment to Pernod’s acquisition of Monkey 47 Gin.
More on this topic: The sweet outlook for bitters lies behind Campari’s Picon buy
E&J Gallo Winery has added another brand to its Spirit of Gallo division, making a “strategic investment” in small-batch American whiskey maker Horse Soldier Bourbon. The deal – terms of which were not disclosed by either party – will see Spirit of Gallo begin distributing the brand in the US, effective immediately.
Just Drinks thinks: Another day, another dollar invested in American whiskey. US bourbon certainly feels like the spirit du jour as far as investment and M&A activity is concerned right now. Earlier on in the month, we saw Bardstown Bourbon Co. – which was itself acquired by a private-equity firm in March – assume full ownership of fellow bourbon producer Green River Spirits, while just last week Beam Suntory announced plans to invest $400m into its Booker Noe Distillery.
With the US whiskey market growing steadily across the globe – the category is set to be worth $US25bn by 2026 – and Anglo/European-US tariffs finally out of the way, E&J Gallo will be looking at opportunities for Horse Solider not just in its already well-established domestic market, but also further afield.
The buy is E&J Gallo’s first since creating a dedicated spirits division – Spirit of Gallo – back in March, and it wouldn’t be a surprise to see the California-headquartered group become a bigger player in spirits in the future, as the category continues to take market share from wine and beer in the US.
Royal Unibrew has bought Canada-based craft brewer Amsterdam Brewery Co. for CAD44m (US$33.9m) in a play to strengthen its North American production and distribution. The craft brewer operates two restaurant bars in Canada, Brewhouse on the Lake in Toronto and Barrel House in Leaside. Both are included in the deal.
Just Drinks thinks: The purchase of Toronto-based Amsterdam Brewery Co. will help protect Royal Unibrew’s business from rising freight costs and other supply chain issues that have plagued the global beverage industry in the last twelve months. In a move that has real echoes of Sapporo’s move for Stone Brewing just last month, Royal Unibrew says it intends to serve much of its North American market from Amsterdam Brewing Co.’s 65,000 square-foot production facility.
Craft beer in North America has had a tough time of late – high-profile sales such as Stone and that of the ailing Modern Times have led some to suggest the market has reached saturation point. While it’s fair to say the explosive growth opportunities – and huge investments – that defined the segment in the past ten to 15 years are probably a thing of the past, this recent flurry of M&A activity suggests craft and speciality beer is still an attractive proposition.
More on this topic: Why Sapporo’s swoop for Stone Brewing makes sense