Diageo has moved to bolster its premium rum offering with the acquisition of Don Papa for an initial EUR260m (US$282m).

The deal to purchase the dark rum from the Philippines could end up costing the London-headquartered spirits giant up to EUR437.5m, including a potential consideration of an additional EUR177.5m in performance-related add-ons. The acquisition will be funded through existing cash reserves, Diageo said.

Don Papa rum was founded in 2012 by entrepreneur Stephen Carroll, alongside Andrew John Garcia. It is available in 30 countries, with France, Germany and Italy being its largest markets. The rum is distilled and aged on the island of Negros, the third most populous island in the Philippines.

“We are excited by the opportunity to bring Don Papa into the Diageo portfolio to complement our existing rums,” John Kennedy, the president of Diageo’s operations in Europe and India, said. “This acquisition is in line with our strategy to acquire high-growth brands with attractive margins that support premiumisation and enables us to participate in the fast-growing, super-premium-plus segment.”

Carroll, who will remain involved with the brand following the deal, added: “Diageo has a strong track-record in nurturing founder-led brands. They believe in our unique story and have genuinely embraced our brand idea. We believe this acquisition is a great opportunity to take Don Papa into the next exciting chapter of its development.”

The transaction is expected to close in the first half of 2023.

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By GlobalData

Diageo’s rum roster is fronted by the mainstream Captain Morgan brand but also includes the high-end Guatemalan offering Ron Zacapa. The group also owns a stake in Caribbean brand Ten to One through its US-based Pronghorn incubator, which backs Black-owned spirits brands.

The dark rum segment was worth US$20.3bn in 2022, according to GlobalData. By 2026, it is predicted this will have grown to US$23.1bn, giving the segment a five-year CAGR of 2.62%.

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