Start small, sell big

Something interesting is happening in the spirits industry; the big global players such as Diageo, Pernod Ricard and Bacardi are shopping to expand their portfolios.


Latest Bacardi has bought a minority stake in Teeling Whisky.


Earlier this year we have seen Diageo buy Casamigo for up to 1 billion US dollars. A couple of years ago they also posted 100 million in the Danish whisky company Stauning.


But the one that is really going all in at the moment is Pernod Ricard with the buying of remarkable brands such as Vida Mezcal, Smooth Ambler, 4 Roses and Monkey 47.

We are witnessing a consolidation of the market on a global scale, which objectively is nothing extraordinary. We even see it in our own scene in Copenhagen, where bigger bar and restaurant companies buy up bars around the city to achieve bigger market shares.
When it comes to the spirit companies there can be several different reasons behind the tendency we are seeing:

They are buying into a spirit category they believe is on the rising. That could be the reason mezcal and tequila brands are in demand.

It is the value of a handcrafted brand that is attractive because it has a story to it and isn´t “just” build by a big corporate company.

Buying a valuable brand such as Monkey 47, 4 Roses or Vida can strengthen your position in the markets and put you in front of competition

There are many reasons besides these, obviously strategic business and growth strategies.

What is interesting is, how will this affect the product in the long run AND how will it affect the market/industry?

Will the aquisitions of especially the tequila and mezcal brands finally help these spirit categories to make it to a wider segment, so that bartenders in the future will get request for quality tequila and mezcal such as it is with rum today?

What a lot of people are concerned about is the product and brands itself – will the take over by a bigger company influence the quality of the product good or bad, if at all?

When we look at the product of agave often it is associated with small local farmers making their living from producing agave for the brands. Some also fear that the hardcore business aspect of a global company can put to much pressure on “the little guy” in the field, forcing him to sell cheaper or overproduce. The same goes when a relatively small company like Stauning is “assisted” with 100 million kr. How will it affect the production, what will happen to the brand and so on..

There are several aspect to take into consideration when discussing the topic and there probably isn´t  a clear answer.

What do you think is going on and how will it affect the industry both on a bigger scale but also in our local scene?


Feel free to leave a comment below or on FB 🙂

 

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