Diageo has agreed to trade its Bushmills Irish whiskey brand to Jose Cuervo as part of a deal to acquire full control of Tequila Don Julio and $408 million in cash.
Under the deal Diageo will take control of the 50 per cent of Don Julio that it does not already own. Completion is expected in early 2015 and should be break even at the profit level by the third year.
The agreement also includes the early termination of Jose Cuervo's production and distribution of Smirnoff in Mexico.
Headquartered in Mexico City, Jose Cuervo, Jose Cuervo is the oldest tequila company in the world. The firm’s chief executive described the acquisition of Bushmills as “the most important purchase the company has made.”
“This is a very exciting time for both Bushmills Irish Whiskey and Jose Cuervo. We see this acquisition as a fantastic opportunity to continue to nurture and grow the Bushmills Irish Whiskey brand globally, underpinned by the strong expertise and focus of Jose Cuervo as one of the world’s leading drinks corporations,” he said.
“We see great synergies and similarities between the two brands. Like Bushmills Irish Whiskey, Jose Cuervo is built on a very strong tradition of quality and craftsmanship that dates back over 250 years, so we understand the importance of nurturing and protecting the heritage and quality of a brand and are strongly committed to doing exactly that with Bushmills. Bushmills Irish Whiskey will be in very safe hands,” he added.
The Old Bushmills Distillery in Co Antrim, which is one of Northern Ireland’s top tourist destination, will continue to operate as normal, the group said in a statement.
Founded in 1608, it is believed to be the oldest licensed distillery in the world and attracts around 130,000 visitors per year.
Bushmills had sales of £57 million in the year ended June 30th.
“Bushmills Irish Whiskey is a brand built on great history, heritage and passionate people and has been a cherished part of the Diageo family for more than nine years. During this time we have invested over £80 million to build capacity, infrastructure and maturing inventory at the Distillery, which has supported the continued growth of the brand,” said Colin O’Brien operations director, Diageo.
“We are immensely proud of these achievements, and while we recognise that today’s announcement does represent a change for Bushmills we are confident that Jose Cuervo - a company with a proven commitment to its people and to valuing the history and heritage of its brands — will continue to nurture Bushmills in the future,” he added.
Diageo previously distributed the Jose Cuervo brand outside of Mexico. As the distribution deal neared expiration, Diageo tried to buy the brand outright, but talks with its owner, the Beckmann family of Mexico, broke down in 2012 and the group stopped distributing Jose Cuervo, though it maintained its stake in Don Julio.
Diageo, the world’s largest spirits company, has since been trying to fill the gap in its tequila portfolio, buying brands DeLeon and Peligroso earlier this year.
Additional reporting: agencies
