Diageo completes Don Julio Tequila acquisition

By Erin Smith

Published: 02 March, 2015

Last week Diageo completed the full acquisition and control over Tequila Don Julio from Jose Cuervo in exchange for Bushmills Irish whiskey brand.

Don Julio Anejo Don JulioDon Julio now globally owned by Diageo

Last week Diageo completed the full acquisition and control over Tequila Don Julio from Jose Cuervo in exchange for Bushmills Irish whiskey brand.

Ivan Menezes, Diageo's chief executive officer said the acquisition delivered on Diageo's strategy to build its 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," he said.

As part of the deal, Diageo gains full ownership and distribution rights for Tequila Don Julio and Tres Magueyes, the 'La Primavera' distillery, inventory and agave supply, and gives Diageo the ability to make investment decisions across supply, marketing, and innovation to support the continued growth of the brand, and become more competitive in the category.

In exchange for giving up its share of Don Julio to Diageo, Jose Cuervo will terminate its distribution rights for Smirnoff in Mexico and will acquire Bushmills Irish whisky brand.

Don Julio is the first wholly owned Mexico-based tequila brand for Diageo. It hopes to capitalise on the huge growth the spirit has enjoyed in recent years, particularly the ultra-premium category in the USA.

Last month a report by the Distilled Spirits Council of the United States reported found US imports of tequila had grown 92% over the last decade, with over 13.8 million 9-litre cases sold.

Diageo's decision to plug a gap in their spirit portfolio by investing in a tequila brand was well received by investment analysts when the announcement was made in November. The acquisition of an ultra-premium brand was a particularly good bet as ultra-premium tequila is the highest revenue earning category for the spirit.

Since 2002, 'super premium' tequila has grown over by volume 568.1% and by value has 513.3% according to DISCUS figures. In the US alone the super-premium tequila category was the largest category by value for the first time last year bringing in revenues of US$860 million for 2014. This was the first time that the super premium category revenues outperformed the premium category.

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