Diageo completes Don Julio acquisition

Diageo has successfully gained full ownership of Tequila Don Julio, completing the company’s efforts to gain a foothold in the strengthening Tequila market.

Diageo CEO Ivan Menezes wishes to build the company’s presence “in the world’s fastest growing markets”

The takeover gives Diageo 100% ownership of Don Julio’s brands Tequila Don Julio and Tres Magueyes, and assets including the La Primavera distillery in Mexico and the producer’s agave production.

Despite the deal coming at the cost of Diageo’s Bushmills Irish whiskey brand, which was traded to Casa Cuervo as part of the deal, the growing Tequila market was an area Diageo has been seeking to re-enter since it failed to acquire the Jose Cuervo brand in late 2012.

Casa Cuervo has paid Diageo $408 million for the trade and the early termination of a contract that saw the Mexican company produce and distribute Diageo’s Smirnoff vodka in the country.

Diageo is hoping that Tequila Don Julio, which sits in the premium end of the market, will continue to reap the rewards of a 3% year-on-year growth witnessed by the category last year.

The brand’s sales have already grown by 15% and 8.5% in the last two years, and it now sells 590,000 cases per year, worth £105 million, according to Diageo.

In a statement from Diageo, chief executive Ivan Menezes commented: “I am delighted to have completed this acquisition which delivers on our strategy to build our presence in the world’s fastest growing markets and to invest behind the biggest growth opportunities.

“Tequila is an important global category with tremendous growth potential and with the purchase of Tequila Don Julio we now have full ownership of a leading ultra-premium brand.”