Biggest drinks trade acquisitions of 2017

While every year brings with it its fair share of mergers and acquisitions, 2017 has seen some of the biggest, with the drinks trade catching onto the promise of super premium Tequila, the burgeoning trade in Cannabis and unstoppable rise of craft.

Global brewer Heineken and AB InBev continued in their efforts to gain a foothold on the lucrative craft beer market, snapping up an increasingly long list of brewers across the world, while Tequila proved to be the biggest draw for those looking to build their power in the spirits market.

Consolidation in the drinks industry continued within the supply chain, with two of the biggest deals taking place in the US, while one drinks brand took a significant and bold step toward capitalising on the growing market for marijuana in the states.

As 2017 comes to a close, we look back on another year in the drinks trade, highlighting a selection of the year’s most significant acquisitions.

Click through for a reminder of some of the biggest deals that were rubber stamped in 2017…

10. AB InBev buys Aussie craft brewer and invests AU$10m (£5.7m) for a new brewery

AB InBev has bought Australian craft brewer Pirate Life, quickly confirming that it would be investing £5.7 million in the building of a new brewery

Most recently, ABInBev snapped up Australian craft brewery Pirate Life for an undisclosed sum, swiftly confirming that it would be investing £5.7 million in the building of a new brewery for its latest acquisition.

This is by no means the first craft producer to have caught the attention of the global brewer. Earlier this year it bought fellow Aussie craft producer 4 Pines, and in 2016 it snapped up London’s Camden Town Brewery for £80 million, leading to the opening of a new £30 million brewery for the brand this year in Enfield.

However it does signal the brewer’s continued interest and enthusiasm for the craft cause, and ongoing strategy to gain a footing on this growing but increasingly complicated category as demand for  mass market lager brands continues to dwindle.

Last year beer writer Roger Protz voiced his concern that ‘big beer’ companies are not only trying to dominate the independent brewing sector, but also “fooling consumers into thinking they are still drinking ‘independent’ or ‘craft’ beer”.

Pirate Life’s founding brewers, Jack Cameron and Jared Proudfoot, met during apprenticeships at BrewDog, and founded Pirate Life on their return to Australia in 2015.

Pirate Life co-founder, Jack Cameron, said: “Looking back at what we set out to do when we started in 2015, we aimed ‘to be an exciting and challenging new company brewing internationally recognised beer that excites and challenges the lifestyles and palates of beer drinkers globally.

“Continuing with this philosophy, our new partnership helps us take our dream to a level we could never imagine and push ourselves and our beers further. Our whole team are sticking around and it’s invaluable for all of us to be able to benefit from the knowledge and skills of some of the best brewers in the world”.

9. US wholesalers merge in $12 billion mega deal

In November, two of the biggest alcohol wholesalers in the US – Republic National Distributing Co. (RNDC) and Breakthru Beverage Group – announced they were preparing to merge, heralding the creation of a US$12 billion company.

RNDC, a distributor and broker of premium wine and spirits, and Breakthru Beverage Group, a distributor and broker of beer, wine and spirits in the US and Canada, are both members of the Forbes list of “America’s Largest Private Companies”.

RNDC operates across the US and employs more than 9,500 people nationwide. Breakthru meanwhile is the result of the 2015 merger between Wirtz Beverage Group and Charmer Sunbelt Group, and is the leading North American beverage wholesaler with 7,000 employees and distribution operations across the US and Canada.

Together, the new company will control the distribution of spirits brands including Beam Suntory, Brown-Forman, Diageo, Edrington, Moët Hennessy, Pernod Ricard, Proximo, Rémy Cointreau, Sazerac, Tito’s and William Grant & Sons in the US.

In wine, leading suppliers include Banfi, Constellation, Gallo, Jackson Family Wines, Kobrand, Ste. Michelle, Trinchero and The Wine Group, while their combined beer portfolio will include Heineken, MillerCoors and a number of craft brewers.

Under the terms, Tom Cole, president and CEO of RNDC, will serve as CEO of the consolidated company, while RNDC’s Bob Hendrickson would act as its chief operating officer. Danny Wirtz, currently vice-chairman of Breakthru, would become its chief growth and strategy office, and Greg Baird, president and CEO of Breakthru, would assume the role of chief integration officer.

The deal, which is subject to regulatory approval, is scheduled to be completed in the second quarter of 2018.

8. ThaiBev buys Myanmar Distillery Co. for S$1 billion (£550m)

ThaiBev, the Thailand-based spirits and beer maker, cemented its confidence in the thriving Asia-Pacific market in October, acquiring a 75% stake in Myanmar’s biggest distiller for a cool S$1 billion (£550m).

Myanmar Distillery Company (MDC) is Myanmar’s largest spirits company and the producer of Grand Royal, the country’s leading whisky brand.

It also makes a range of other whiskies and gin at its two distilling, blending and bottling facilities in Yangon and Mandalay. The deal also includes MDC’s supply chain, giving the company direct access to a market that has received increasing attention from global investors in recent years.

In 2015 Japan’s Kirin Holdings took control of the Myanmar Brewery (MBL), the country’s largest brewery, in a deal worth US$560 million, while Dutch brewer Heineken opened a new brewery in the country after a 20-year absence – just two months after Carlsberg opened a $75m brewery there.

Major producers had suspended their activities in Myanmar two decades ago when the country was hit by international sanctions due to the widely condemned actions of the country’s former military rulers. Now democratised, international businesses are now returning to the country.

7. Campari buys Bulldog Gin for £46.8 million

Campari snapped up a fledgling gin brand in 2017 for an impressive £46.8 million, as part of its continued strategy to streamline its portfolio to focus on spirits.

The group has distributed Bulldog gin since 2014 as part of exclusive agreement in which Campari would have the option to buy the brand in 2020. Following a renegotiation of the deal terms, Gruppo Campari bought Bulldog three years earlier than planned.

Based on a blend of 12 botanicals from eight countries, including the quirky dragon eye, lotus leaf and poppy, the gin is quadruple distilled in traditional copper pot stills in England.

Campari said in a statement that the sale allows it to “fully exploit the brand’s growth potential” and “take full control of the marketing strategy and brand building initiatives”.

It follows the selling off many brands by Campari in 2017, which saw it fully exit the still wine business with the sale of its Château de Sancerre winery for €20.5 million, and Irish liqueur brands. 

In October the group sold its fruit-flavoured carbonated drinks brand Freedea, which includes its Lemonsoda, Oransoda, Pelmosoda and Mojito Sodato variants, to the Danish based beverage company Royal Unibrew A/S for €80 million.

6. Sapporo acquires Anchor Brewing for $85 million

Stateside, Japanese brewing giant, Sapporo, confirmed in August that it had bought one of California’s leading craft brewers, the Anchor Brewing Company, for US$85 million.

The deal between Japan’s oldest brewer and the venerable San Francisco-based company that makes Anchor Steam was announced yesterday (Thursday 4 August) and marks the latest acquisition of the first wave of ‘craft’ breweries by a macrobrewer.

The purchase of Anchor Brewing is the second high profile move by a big Japanese brewer in recent years with Asahi having acquired Peroni, Grolsch, Meantime and Pilsner Urquell in a multi-billion euro deal late last year after the brands were sold off by AB InBev following its takeover of SAB Miller.

Founded in 1896, Anchor Brewing is one of the oldest breweries in the US and one of its craft ‘originals’. Last year it sold a reported 1.75 million cases and generated revenue of US$33m.

5. Michelin acquires 40% stake in The Wine Advocate

Bringing the world of fine wine and fine dining together under a Michelin umbrella, July saw Michelin take a 40% stake in The Wine Advocate and Roberparker.com – both founded by the wine critic.

The partnership will initially focus on Asia and North America prior to a rollout in Europe and the rest of the world.

“Far too long critics have divided wine and food into two separate areas of expertise, but now the most realistic blend of impartial, independent, unbiased, intelligent food and wine opinion and wisdom have been married for the benefit of both wine and food consumers,” Parker said of the move.

Back in 2012 Parker sold “a substantial interest” in The Wine Advocate to a group of Singapore-based investors working in the business and technology sphere. At the same time he stepped down as editor-in-chief of the publication and appointed Lisa Perrotti-Brown MW as the new editor.

The Michelin collaboration began last September with the launch of a yearlong series of wine pairing dinners in Hong Kong and Macau cooked by top Michelin-starred chefs, from Alvin Leung of Bo Innovation to pastry chef Pierre Hermé.

As part of the ‘Michelin Dining Series’, the chefs create dishes specifically to pair with top Parker-rated wines like the 100-point Chapoutier Ermitage ‘Le Méal’ Blanc 2010.

First published in 1978, The Wine Advocate has offices in Singapore and the US and produces nearly 40,000 wine reviews a year.

4. Constellation Brands buys 10% stake in cannabis company for £141 million

Next year the legal marijuana market is expected to reach US$7.5 billion in Canada and $10.2bn in the US.

A significant step toward establishing the drinks industry’s place within the burgeoning cannabis scene was taken in October, with one of the world’s biggest drinks producers buying a £141m stake in a Canadian marijuana company.

Constellation Brands now has a 9.9% stake in Canopy Growth Corp, which has a market value of £1.3 billion, and plans to make cannabis-infused drinks in the future – when they become legal in the country next year.

Chief executive Rob Sands believes cannabis will eventually be made legal for recreational use in all American states. However rather than developing cannabis wine or marijuana beer, Sands plans to make alcohol free cannabis drinks like sodas, coffees and fruit –based drinks.

According to Euromonitor, next year the legal marijuana market will be US$7.5 billion in Canada and $10.2 billion in the US.

Spiros Malandrakis of Euromonitor believes that the marijuana industry could fuel alcohol’s next growth cycle.

“The cannabis revolution is in full swing while the alcohol industry appears to be largely sitting on the fence, occasionally throwing crumpled cans in the direction of the ongoing legalisation debate.

“Visibly intimidated, insular and inherently conservative, large parts of the alcohol industry acknowledge and highlight the dangers to their penetration rates and profitability, but largely fail to see the huge potential behind the plumes of hazy smoke,” he said.

“Fighting the surging green tide will become an expensive exercise in futility. Ignoring it will guarantee the belated, panicky, knee-jerk reactions that greeted the craft juggernaut once it had already established offensive positions at the macro brewers’ gates.

“Cannabis can indeed cross-pollinate and, ultimately, become the fertiliser for radical innovation and experimentation,” he added.

3. Latour’s owner buys Clos de Tart for upwards of €200 million

The biggest acquisition of the year within the fine wine world was the passing of ownership of Clos de Tart to the Artemis Group – the holding company owned by Château Latour’s owner, François Pinault.

While the exact figure paid for the famous 7.5 hectare grand cru monopole in Morey-St-Denis is unknown, speculation puts it at in excess of €200m, perhaps even €250m.

If so it would be a new record even for the often stupendous prices which top vineyards change hands for in Burgundy.

Pinault already owns Domaine de Eugénie in Vosne-Romanée, the former domaine of René Engel which he bought in 2006.

With this sale Pinault becomes just the fourth owner of the property in its 900 year history. Founded by the Bernadine sisters of the Abbey de Tart in 1141, the vineyard passed into the hands of the Marey-Mange family in 1791 after the Revolution when all Church property was confiscated.

2. Amazon buys Whole foods for £10.7 billion

While an indirect acquisition for the drinks industry, the $13.7 (£10.7 billion) purchased of Whole Foods by Amazon is significant nonetheless.

The deal will ultimately put Amazon head-to-head with the major retailers in the US and UK, market analysts have warned, calling it a “wake-up” call for the grocery industry, pointing to how serious the online giant is about cracking the food and wine market, while also pointing to the strength of bricks and mortar to make a more attractive omni-channel offer.

The deal will see the online giant take on around 450 stores across the US and Canada and nine in the UK, which are set to remain under the Whole Foods brand.

Currently Whole Foods offers wine in around 250 of its US stores, and all of its UK sites, with around 85 of the sites across the countries also operating a wine bar, serving wine on tap.

Amazon has for several years been working to gain a share of the alcohol market by selling beers, wines and spirits on its website and setting up virtual shops for producers, which began with Wineshopper.com in 2000, which was resurrected in 2009 before Amazon Wine came along in 2012.

Amazon Wine was not actually selling wine but acting instead as a marketing platform for wineries which had to have the required licenses and permits to sell and ship wine, while Amazon taking a fee on every order.

Its purchase of Whole Foods coincided with its announcement that it would be closing Amazon Wine in the US by the end of the year, as it steps up its wine retailing through other outlets, including Amazon Fresh, Prime Now, Amazon Pantry, and Whole Foods Markets.

1. Diageo buys Casamigos Tequila for $1 billion

The biggest deal of the year in terms of single brand power was undoubtedly Diageo’s purchase of Casamigos Tequila in a deal worth US$1 billion.

Casamigos, which means “house of friends” in Spanish, was founded in 2013 by George Clooney and his friends Rande Gerber and Mike Meldman.

Having started out as a pet project to enjoy with friends and family, over the last four years Casamigos quickly earned the celebrity seal of approval and has become the fastest-growing super premium Tequila brand in the US.

The brand produced 120,000 cases of Tequila last year and is on track to make 170,000 cases this year. All three owners are expected to keep an active role in the company once the sale goes through.

Keen to be a part of super premium Tequila’s rapid growth, Diageo agreed to pay $700 million up front for Casamigos and a further potential $300 million based on its performance over the next 10 years.

Casamigos is the fourth brand in Diageo’s Tequila portfolio, which also includes Don Julio, DeLeón, and Peligroso.