A New Wave of M&A activity in the Drinks Industry

There has been an increased level of M&A activity in the Drinks Industry of late, including investments such as the significant minority stake taken by HEINEKEN in SERVED, the ready-to-drink brand, co-owned by singer Ellie Goulding, for an undisclosed sum.

SERVED was created by brothers Dean and Ryan Ginsberg, and Ellie Goulding in 2020, and has since become one of the fastest growing ‘ready to drink’ (RTD) brands in the UK with a range including ready-to-drink cocktails and hard seltzers, made using ‘wonky’ fruit, and premium spirits.

The UK RTD category has grown 47.5% in five years and was worth £866m in 2022 and the RTD cocktail category grew by 24% last year, as consumers look to enjoy high-quality cocktails in a convenient and sustainable format, a trend that is set to continue.

“This is a significant milestone for the business. We are extremely proud of what the team has achieved in a short period of time, but our vision has always been to lead the category, and this partnership with HEINEKEN will enable us to accelerate our growth and maximise the potential of the brand.” Dean Ginsberg, SERVED

Meanwhile, Italian multinational Illva Saronno Group, the drinks company behind Disaronno and Tia Maria has announced a majority stake purchase of shares of Baltimore-based Sagamore Spirit rye whiskey brand and distillery. The deal strengthens Illva Saronno Holding’s presence in the USA and also creates the opportunity for Illva Saronno Group to expand their whiskey portfolio beyond The Busker Irish Whiskey into American rye whiskey.

Founded by Kevin Plank in 2013 with Bill McDermond as minority owner, Baltimore-based Sagamore Spirit prides itself on in-state partnerships, including local grain and water sourcing, state-of-the-art distilling, and ageing – all in Maryland.

“We are thrilled to announce this transaction, which supports our portfolio strategy to acquire high growth, attractive margin brands, and in this case, broaden our offering into the premium American whiskey segment,” said Aldino Marzorati, CEO Illva Saronno Group

September 2023 also brought the news that Surrey’s Silent Pool Distillers had been acquired in full by family-owned William Grant & Sons.  Founded in 2014 by Ian McCulloch and James Shelbourne, Silent Pool Distillers has grown to become the producer of one of the best-selling ultra-premium gins in the UK.

Global drinks business International Beverage announced its acquisition of Cardrona Distillery, one of New Zealand’s pioneering premium spirits producers.

The acquisition includes the Cardrona Distillery and visitor centre near Wanaka in New Zealand’s Crown Range Mountains; plus Cardrona’s portfolio of super-premium brands including Cardrona single malt whisky, The Reid Vodka, The Source Gin and the Rose Rabbit liqueurs.

This acquisition complements its established Scotch whisky and spirits brands which include Old Pulteney, Speyburn and Caorunn Gin. Desiree Reid, who founded Cardrona Distillery in 2015, will remain as Managing Director.

International Beverage will focus on investment in the purpose-built distillery site and maximising the potential of Cardrona’s brands in the core New Zealand, UK and USA markets. They will also deploy International Beverage’s global network to build select new routes to market.

 “Building Cardrona has been a remarkable journey, made possible through the work and support of many, many people. I’m thrilled that International Beverage shares our belief in Cardrona’s quality and potential as we embark upon the next chapter of our story together. I look forward to working with their team to bring our spirits to more people in markets around the world in the future.’ Cardrona Distillery founder and Managing Director Desiree Reid

International Beverage also entered into an agreement with Anora Group plc to acquire its Larsen Cognac business.

The proposed acquisition includes Larsen’s production site and eau-de-vie maturation stock in Cognac, France, as well as its cognac brands Larsen, Renault and Monopol, plus brandy brand Ibis.

The deal forms part of International Beverage’s strategy to expand its portfolio of premium spirits brands and strengthen its international routes to market to deliver global growth. It also marks the company’s first move into the Cognac category, which the IWSR predicts will increase global sales with a CAGR of 5% in volume and 7% in value between now and 2026.

Anora, which has owned Larsen Cognac since 2013, will continue as the exclusive distributor for the brands in the Nordic and Baltic regions, including travel retail and duty free.

Founded in 1926 by Norwegian adventurer Jens Reidar Larsen after he settled in South West France, Larsen Cognac is one of brandy’s enduring success stories, with a portfolio of acclaimed expressions and aged eau-de-vie stock built up over three generations to secure the quality of production in the future.

The agreed enterprise value is EUR 54.1 million and is subject to ordinary closing conditions. Following completion of the transaction, International Beverage will focus on strengthening Larsen’s position through its network of distribution partners globally with specific focus on key export markets in Asia, including China and Hong Kong where International Beverage owns a premium spirits distribution business, AsiaEuro International Beverage (AIB), through its joint venture.

As a wholly owned subsidiary of Thai Beverage Public Company Limited, Southeast Asia’s leading beverage producer and distributor, International Beverage is already a distributor of Larsen Cognac in China and Hong Kong through its subsidiary, AsiaEuro International Beverage (AIB), with in-depth understanding of the brands.

Bacardi Limited also announced in September 2023 the completion of a transaction that makes the family-owned company the sole owner of ILEGAL Mezcal, a leading super premium artisanal mezcal. The transaction follows a successful relationship in which Bacardi partnered with ILEGAL since 2015.

The super-premium plus mezcal category is growing at a fast pace and is expected to grow at a CAGR of 16% over the next five years according to IWSR. Between now and 2027, the agave category – which includes both mezcal and tequila – is expected to be the sixth largest category globally, and it recently overtook American Whiskey to become the second largest category (by value) in the U.S. At 86% of global market share, the United States dominates the super-premium mezcal category. (Source: 2022 IWSR).

“We believe that ILEGAL has the credentials to own and lead the super-premium mezcal category at a global level. ILEGAL perfectly complements our portfolio and bringing it into our business sets the brand up for even greater growth as mezcal captivates more and more consumers.” Barry Kabalkin, Vice Chairman of Bacardi Limited

John Rexer created ILEGAL in 2006, after years of working with small distillers in Oaxaca to make mezcal for his bar in Guatemala. John’s goal has been to bring the finest artisanal mezcal to a global market. He has worked closely with the distillers in Oaxaca to create sustainable jobs, and to be a positive force in protecting the environment and preserving local culture. John will continue to guide the vision of the brand.

Splash Beverage Group announced it has executed a Letter of Intent to acquire JEM Beverage Management Company, LLC, owners of the brand Western Son Vodka.

Western Son Vodka, founded in 2011 is headquartered in Pilot Point, Texas, with a production and distribution campus spanning more than 150,000 square feet.  Over the last twelve months Western Son Vodka has sold approximately 309,000 9-liter cases of vodka.  Distilled 10X and made with 100% American corn, the award-winning portfolio includes a Best-in-Class Original Vodka and is a four-time winner of Impact’s Spirits Hot Brand Award.

“This acquisition is a significant step forward in our growth strategy.  When the transaction is complete, this will be our largest acquisition to date, and it falls within the range of acquisition targets we outlined in our recent acquisition Credit Facility announcement as we move down the acquisition path.” Robert Nistico, Chief Executive Officer of Splash Beverage Group

“Splash Beverage will bring sales and marketing support to Western Son and Western’s distillery and the shipping campus will establish a centralized production and distribution hub for Splash’s existing brands, Pulpoloco and SALT Tequila in addition to any future acquisitions, creating logistics cost savings in favorable shipping lanes, reducing freight out expense and ultimately increasing margins.  We believe this acquisition will help accelerate both the depth and breadth of distribution for all the brands involved.”

Stock Spirits Group has finalised two acquisitions during the month of September 2023. The first is the completion of the purchase of the Société Dugas, a brand builder and distribution partner for premium and super-premium spirits in France. The second is the acquisition of Clan Campbell from Pernod Ricard. Clan Campbell is one of the leading brands in the 12-year-old-Scotch-blended-whisky segment in France and is also present in other European markets such as Spain, Luxembourg and Italy. Its business has grown in recent years with the addition of Clan Caribbean, a rum-based alcohol drink.

These acquisitions represent an important step for the Stock Spirits Group as it implements its growth strategy in Europe. They enable entry into new markets in Western Europe as well as the fast-growing whisky category. Stock Spirits will further develop the Dugas portfolio with Clan Campbell whisky and selected Stock brands with the intention of strengthening Dugas’ position and reach in the retail and modern trade segment in France. Under new ownership Dugas will continue to build on its strong expertise in building premium rum and whisky brands through its continued and unique access to its network of ‘cavists’ and on-trade channels. Dugas will also retain its business model with wine merchants.

“We are delighted to have finalised these two major transactions, with the Dugas and Clan Campbell. They will be strong drivers for our expansion in Western Europe. Stock Spirits will use the Dugas distribution network for selected brands from its own portfolio,” Jean-Christophe Coutures, Stock Spirits CEO

In addition to the acquisition of the Dugas group and Clan Campbell brand, Stock Spirits recently completed the purchase of the Polish Polmos Bielsko-Biala, an expert producer of high-quality pure and flavoured spirits. The transaction will complement Stock’s own portfolio in the vodka segment in Poland in the mainstream and premium categories. Polmos Bielsko-Biala’s premium brands will also be a significant driver of premium vodka exports across Europe and its production facility will provide the Group with additional production capacity. Stock Spirits is also in the process of finalising the purchase of Hamburg-based Borco-Marken-Import Matthiesen, a leading producer, marketer and distributor of international spirits brands in Germany, including the iconic Sierra Tequila. The transaction is still subject to the completion of regulatory procedures in Germany and Austria.

Back in August 2023, Molson Coors Beverage Company announced the acquisition of Blue Run Spirits, further expanding its portfolio beyond the beer aisle. 

Based in Georgetown, Kentucky, Blue Run is one of the whiskey industry’s new entrants since the brand’s launch in October 2020. As Molson Coors’ first spirits acquisition, the addition of Blue Run boosts the company’s footprint in spirits as it continues to evolve from its storied history as a beer company and premiumize its portfolio. In tandem with the acquisition, Molson Coors has established Coors Spirits Co., an expansion of its existing spirits business, which will house Blue Run, Five Trail Blended American Whiskey, Barmen 1873 Bourbon and future innovation. This acquisition will more than double the size of Molson Coors’ spirits team, further supporting the company’s premiumization strategy.

Molson Coors entered the whiskey space with the 2021 launch of Five Trail Blended American Whiskey and the 2022 introduction of Barmen 1873 Bourbon.

“Molson Coors has been on a journey to broaden beyond our beer roots and build powerful brands in growing categories, and Blue Run joining us is an exciting next step as we establish Coors Spirits Co.,” Michelle St. Jacques, Molson Coors’ Chief Commercial Officer

“Blue Run has accomplished in three years what many brands hope to do in a generation and has done it at the luxury end of the whiskey category. Importantly, we are committed to maintaining Blue Run’s well-known quality, design and innovation as we continue to grow our spirits portfolio.”