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November 2, 2022

Diageo makes US single malt play with Balcones Distilling buy

The deal is Diageo’s first full-scale acquisition in American single malt.

By James Beeson

Diageo has bought the American single malt whisky producer Balcones Distilling for an undisclosed sum.

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The deal – announced today (2 November) and financed through the London-headquartered firm’s existing cash resources – is Diageo’s first full scale acquisition in the American single malt category. Diageo also has a minority investment in Westward Whisky via its Distill Ventures accelerator.

Texas-based Balcones Distilling – which has a portfolio comprising “super-premium and above” whiskies – will join Bulleit, the Kentucky Bourbon brand, in Diageo’s US whiskey roster.

Balcones Distilling sold more than 15,000 nine-litre cases (according to Nielsen data cited by Diageo) in 2021 and is available nationally in the US, as well as in 11 international markets including the UK. Its products include Lineage American Single Malt and Baby Blue Corn Whisky.

Diageo’s North America president, Claudia Schubert, described Balcones Distilling as “true innovators and pioneers in the emerging American Single Malt and Texas whisk(e)y movements”.

“This acquisition is in line with our strategy to acquire high-growth brands in fast-growing segments, such as super-premium whisk(e)y, and we look forward to working with the Balcones team to support further growth for these world-class whiskies,” she added.

Balcones Distilling’s chairman Greg Allen said: “We couldn’t be prouder to have created these award-winning American Single Malt and Texas whiskies, but also to have helped initiate an exciting new era of whisk(e)y in Texas. We are thrilled that Diageo shares our belief in its potential and we look forward to seeing Diageo bring Balcones’ incredible whiskies to more consumers.”

US whiskey is in rude health, and sales are being driven by the interest in premium-and-above expressions. According to GlobalData, the category will reach a value of US$19.78bn this year, beating its pre-pandemic high of US$18.59bn. The category’s ten-year compound annual growth rate between 2017 and 2026 is forecast to be 4.3%.

In September, The American Alcohol and Tobacco Tax and Trade Bureau (TTB) closed a consultation on proposals to standardise the definition of American single malt. Federal legislation is yet to be unveiled.

Under the proposed definition, American single malt must be produced entirely in the US, from mashing to ageing. The fermented mash has to be made from 100% malted barley.

An American single malt should also be stored in oak barrels no larger than 700 litres and have a distillation of 80% abv or less. The finished liquid should be bottled at no less than 40% abv. The proposal allows the addition of flavourings and colouring, as well as blending, but neutral spirit must not be used.

American whiskey at start of the runway not end, as tariff barrier comes down 

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While the traditional practices and old ways of doing business are well-established and understood, avoiding the circular economy is not a viable plan for the long term.

However, this circular shift doesn’t have to be a radical overhaul overnight. A combination of small changes can make a big difference. And these changes can result in cost savings.

Siegwerk is an internationally recognised provider of sustainable coatings and inks for the packaging industry. The company has embraced the circular economy and is setting many standards in sustainability in packaging products while working with major brands.

To learn more about the work of Siegwerk in the circular economy, download this document.

by Siegwerk
Enter your details here to receive your free Whitepaper.

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