Diageos purchase of the rest of Don Julio will complete early next year

Diageo's purchase of the rest of Don Julio will complete early next year

Diageo is set to regain full control of the Don Julio Tequila brand from joint partner Casa Cuervo, with Bushmills Irish whiskey going in the other direction.

The company, which pulled the plug on talks with the Beckmann family, the owners of Casa Cuervo, to take full ownership of the Jose Cuervo Tequila brand two years ago, announced early today that it will offload Bushmills, in return for the half of Don Julio that it does not already hold and a payment of US$408m. Diageo inherited Bushmills from Pernod Ricard after the French firm teamed with Beam Inc to buy Allied Domecq in 2005.

Pernod, which sold Bushmills to Diageo for around GBP200m, chose to offload the Irish whiskey in favour of its Jameson brand.

This latest deal will also result in the early termination of Casa Cuervo's production and distribution agreement for Smirnoff in Mexico.

“This is the most important purchase made by Cuervo in its entire history,” said Juan Domingo Beckmann, CEO of Jose Cuervo. “We see this acquisition as a fantastic opportunity to continue to nurture and grow the Bushmills brand globally.

“Bushmills Irish Whiskey will be in very safe hands.”

The Mexican firm stated that the existing management structure would be retained and that “no jobs will be lost as a result of the acquisition”.

Diageo's CEO, Ivan Menezes, added: “We have secured our position in the growing super and ultra-premium segments of the Tequila category and further strengthened our global footprint by expanding our leading position in Mexico where the growth of spirits has great potential.

“(This opportunity) delivers our strategy: to build our presence in the world’s fastest growing markets and lead the industry in the biggest growth opportunities.”

Diageo acquired Don Julio from the carve up of the Seagram portfolio in 2002. It subsequently agreed to sell a 50% stake in the brand to Casa Cuervo the following year. 

The transaction is expected to complete in the New Year.

To read Diageo's official statement, click here. For Cuervo's statement, click here.

A closer look at the Don Julio brand can be found here.

For a just-drinks commentary on the transaction, click here.