Diageo has agreed to swap its Bushmills Irish whiskey brand for full ownership of Don Julio tequila, as the British drinks company seeks to regain its leading position in tequila and build a bigger portfolio of ‘reserve’ brands.
Diageo has agreed a deal with the Beckmann family of Mexico to take the 50% of Don Julio it does not already own, in exchange for its Bushmills Irish whiskey.
Don Julio is the top-selling ‘ultra-premium’ tequila in the US, with bottles ranging from $45 to $375. While Bushmills is a well-known label, it carries a more modest price tag, competing with the much-larger Jameson brand, owned by Pernod Ricard.
Under the deal, Diageo will also get a $408m payment and the right to distribute Don Julio and its Smirnoff vodka in Mexico, boosting its position in a country whose economy is growing, along with its pool of middle-class drinkers.
Diageo chief executive Ivan Menezes said: “This transaction delivers two key objectives for us. We have secured our position in the growing super and ultra-premium segments of the tequila category and further strengthened our global footprint by expanding our leading position in Mexico where the growth of spirits has great potential.
“Diageo has realised this opportunity through the breadth and depth of our portfolio. It delivers our strategy: to build our presence in the world’s fastest growing markets and lead the industry in the biggest growth opportunities. I am delighted we have reached this agreement.”
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