Bacardi buys a stake in Patrón

Bacardi Ltd, the world’s largest privately-owned spirits company has acquired an undisclosed stake in Patrón, the rapidly-growing, super-premium Tequila brand. John Paul DeJoria, co-founder of the brand with his late partner Martin Crowley, will become principle owner.

Patrón has consistently claimed that the brand is not for sale. In the June issue of the drinks business, global brand manager Chris Spake commented: “Over the last few years a number of people have called us up and asked, but the answer is ‘no, we’re not up for sale’. Everybody knows that we’re the hottest property in drinks, but we’re ignoring the chatter and focusing on what we do. We certainly won’t get caught up in the rumour mill.”

However, in spite of these protestations, there has been a widespread assumption that ultimately one of the major global powerhouses would swoop for the brand. Since it was first founded in 1989 Patrón has been one of the true pioneers of the super premium Tequila segment, and growth has been particularly impressive in recent years as the entire category has found favour with consumers in markets around the globe.

In 2005 total volume sales stood at 600,000 9l cases, but this figure had rocketed to 1.6 million cases last year, and Spake has predicted that the brand will punch through the 2m case barrier this year. This phenomenal growth coupled with a well-founded brand identity make the Tequila particularly hot property in today’s highly consolidated industry. In the Power Brands feature in the May issue of the drinks business Patrón emerged as the most talked about brand in our exclusive run down of the top 100 brands in drinks. The Tequila was a new entry on the chart at number 35 – the highest position that a new entrant has ever achieved.

According to a statement issued by Bacardi the two companies will continue to operate separately, “though the relationship is expected to lead to beneficial synergies”. As well as a minority stake, Bacardi will hold one seat on the board of Patrón’s parent company, Caribbean Distillers Corporation, which will be occupied by Bacardi vice chairman Barry Kabalkin.

The deal will result in the payment of an undisclosed sum to the estate of Martin Crowley, in exchange for its 50% interest in the company. This money will be donated to the Widsong Trust – a charitable trust established by Crowley to support the education of underprivileged children around the world – in accordance with Crowley’s will.

Commenting on the deal, Patrón president and CEO Ed Brown said: “Bacardi and its brands have set many standards in the spirits industry and its worldwide experience can certainly help us grow in markets both inside and outside the US. We look forward to gaining from their international experience.” Bacardi chairman Facundo L Bacardi commented: “John Paul DeJoria and Martin Crowley are to be congratulated for creating an extraordinary, hand-crafted product and achieving its enormous success in the marketplace – and for the their contribution to the growth of the Tequila industry overall.” The deal is expected to be finalised within 60 days subject to regulatory approval.

Ben Grant 30/07/08