Bacardi Ltd is tapping into the fast-growing market for tequila by acquiring Patron Spirits International AG in a deal valuing the company at US$5.1 billion.
The purchase is to combine two of the world’s largest closely held distillers, putting Grey Goose vodka, Dewar’s scotch and Bacardi rum under the same banner as Patron’s famous tequilas.
The merger is to give incoming CEO Mahesh Madhavan a prestigious brand as he works to expand Bacardi’s global footprint.
The executive, who is poised to take the reins on April 1, plans to boost sales by getting overseas consumers to trade up from local spirits.
Bermuda-based Bacardi, which already sells Cazadores tequila, accounted for 5.8 percent of the total alcoholic beverage market last year, research firm IRI’s data showed.
“Adding Patron to the Bacardi portfolio creates a tremendous opportunity for the brand outside of the United States, as Bacardi’s international distribution network will help grow Patron around the world, increasing scale in the US and globally,” Madhavan said in a statement.
Bacardi is to tap debt markets to help finance the deal, according to a person familiar with the deal.
Bacardi acquired an initial 30 percent stake in Patron for less than US$500 million in 2008, said the person, who asked not to be named because the details are private.
Agave-based beverages, which include tequila and mezcal, have seen sales accelerate over the past decade.
Super-premium tequila grew eightfold between 2002 and 2016, the Distilled Spirits Council trade group said.
That is attractive compared with other spirits segments, such as rum and vodka: rum volumes declined by 0.2 percent in the same period, and vodka gained 2.4 percent.
The combined company could be the top spirits maker in the super-premium segment in the US, IWSR data showed.
Patron, an early pioneer in the market for upscale tequila, was founded by John Paul DeJoria and Martin Crowley in 1989.
DeJoria — who was once homeless, according to a biography on Patron’s Web site — initially found success in hair care company John Paul Mitchell Systems before helping to start Patron, where he now serves as chairman.
The company succeeded in marketing the spirit to a more sophisticated clientele and broadening its market base.
The deal with Bacardi helps cement tequila’s status as a key product in the global market for spirits.
As sales in the category surged, Diageo PLC last year paid US$1 billion to acquire George Clooney’s start-up Casamigos.
Pernod Ricard SA also boosted its tequila portfolio by acquiring the Del Maguey brand in June last year.
Becle SAB, the producer of Jose Cuervo tequila, rode the wave by raising US$790 million in an initial public offering a year ago.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
O2O BICYCLE SHOW: The Taiwan Bicycle Show next year is to be online to offline, with forums, audio-visual conferences and livestreaming of the offline events Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing Co Ltd (巨大機械) chairwoman Bonnie Tu (杜綉珍) told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. The pandemic has reduced bicycle supplies and increased demand around the world, Robert Wu (吳盈進), chairman of KMC (Kuei Meng) International Inc (桂盟國際), one of the world’s