It must have been around 2009 or 2010 when I interviewed John McDonnell, then COO of Patrón Tequila (who has gone on to have careers with Tito’s vodka and, most recently, Ghost Tequila). The world, and the drinks industry, was in a difficult spot at the time, still reeling from the impact of the global financial crash. Lehman Brothers and all that.
McDonnell, though, was relatively chipper. Patrón was increasing its marketing investment, he told me, just as its rivals were slashing their budgets. The logic was compelling: in a quieter environment, every marketing dollar spent would have more impact.
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I’m getting broadly similar vibes with Sazerac at the moment. Never mind the two failed bids for Brown-Forman; I’m talking more about the bold acquisition of vodka/RTD franchise Au, for a reported sum that could reach $500m – not to mention a number of other, smaller initiatives over the past months.
Just as rivals are focused on rightsizing their operating models and looking for ways to breathe fresh life into ailing brands, the publicity-shy, family-owned company is splashing big sums on future potential and the occasions and formats that it believes offer the best prospects for growth.
So Au, yes, but further moves in the RTD space, all the way back to the BuzzBallz acquisition of two years ago. More recently, there’s been a stake in Margarita-focused RTD Sipmargs, and the Dirty Shirley cocktail brand.
Alongside this, NPD. In recent months, three new RTD brands in the US: Endless Afternoon Whiskey Lemonade, Buckhorn Whiskey Lemonade and Lovebug Hard Cream Soda. Svedka “vodka water” RTDs. In the UK, the 99 and Baby Shots pre-mixed shots, targetting the emerging small-format opportunity. Back in the US, there’s Dahlo as a pitch to the niche, but fast-growing, flavoured soju segment.
This zeitgeist-chasing can at times seem a little chaotic, garnering the impression that Sazerac is throwing lots of things at the wall in the hope that a few of them will stick. But, on the other hand, at a time when market conditions are challenging, at least the company is looking to the future – when many of its rivals are still fretting over what went wrong following the post-Covid bubble.
There are also moves in more ‘traditional’ categories, not least the acquisition of the Garrard County Distilling facility in Kentucky, a 210-acre site with a couple of column stills and warehouses that will supplement Sazerac’s three existing distilleries in the state. This is the clearest example of the company’s opportunism in difficult times: a new facility that only opened in 2024 but shut down a year later.
And then there’s India, where Sazerac is launching two IMFL-style US brands – Southern Comfort Reserve and American Wolf – that blend American whiskey with Indian grain and malt spirit. The company already holds a stake in Goa-based John Distilleries.
That’s quite a frenzy of activity at a time when many companies are thinking about what they can sell – or revitalise – rather than drawing up a shopping list of new additions. It could also help Sazerac steal quite a march on its competitors if only some of these opportunities bear fruit.
Sazerac RTD moves catch the eye
But it’s the RTD side of things that piques the greatest interest. As the category broadens and diversifies, drawing up the right brand strategy is becoming ever more crucial. In particular, how do you find a balance between pure-play RTD brands and line extensions from pre-existing franchises?
Au may have its roots in vodka but at this stage it feels more like the former – as, more obviously, are BuzzBallz, Sipmargs, Dirty Shirley and the various bits of Sazerac NPD.
The soaraway successes in RTDs have tended to be pure-play products
But contrast this approach with Diageo CEO Sir Dave Lewis’s determination to create RTD offshoots of all the company’s major brands. I’ve said before that I can see downsides to this: with a more premium franchise such as Johnnie Walker or Don Julio, the wrong sort of RTD extension risks cheapening brand image, eroding the status of products further up the pricing food chain.
And if we look at the recent history of the RTD category, the soaraway successes have tended to be pure-play products – for the once stratospheric (but now Earth-bound) hard-seltzer segment, think White Claw, Truly and Vizzy’s. Does that branding theory still hold true as RTDs evolve?
We shouldn’t forget that this isn’t a binary choice. It’s perfectly possible to have an RTD stable that is a judicious mix of line extensions of marquee brands, alongside specialist products that target a particular demographic, geographical market(s) and/or consumer occasion.
The pure-play option has hazards too, though. When you’re a company of any scale, developing in-house innovation is notoriously difficult, whether that’s because of corporate culture, the fickle nature of consumer tastes or the undeniably high failure rate of any NPD activity.
In this context, piggybacking on an existing brand or buying a proven success story are the chief options open to companies. We’ve already mentioned the downsides to the former approach but there are clear risks with the latter, too.
Paying $500m for a brand that reportedly generated revenues of £82.8m is pretty ballsy
Paying $500m for a brand that reportedly generated revenues of £82.8m ($112.8m) in the year to April 2025 (albeit up 27% on the previous 12 months) is pretty ballsy, and says two things: Sazerac believes the brand has massive potential to expand beyond its current market; and it also believes that it has longevity.
I can believe the first, given how early Au is in terms of its presence outside the UK market. My concern would be about the latter, in an RTD market that has the attention span of the average 15-year-old. Can Sazerac really achieve the kind of sales, over a longer timescale, that such a hefty sales price is predicated upon?
If it does, it will have to do something that large companies acquiring ‘cult’ brands often signally fail to achieve: not changing a winning formula. All too often, the big boys come in, metaphorical chequebooks in hand, promising faithfully to let their shiny new acquisition keep doing what they do best. “That’s what we bought you for,” they say, “so that you can carry on being you with our support” – before trampling all over these professions of candour – and then wondering why it’s all gone pear-shaped.
Will Sazerac repeat that mistake? Possibly not, given the current evidence with BuzzBallz, which seems to have kept its edge – so far. Either way, the company’s treatment of Au will make for interesting viewing, as will the other future activities of one of the most fascinating operators in today’s drinks industry.
