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Leading Players Diversify Their Whiskey Portfolios, Cultivating The Next Generation Of Growth Brands

September 12, 2019

With whiskies exploding in popularity, major companies have been diversifying their portfolios to secure future growth. Craft spirits have been a particularly prominent acquisition area, and with roughly 1,835 craft distilleries operating in the U.S., according to the American Craft Spirits Association (ACSA), the major players have an abundance of potential investment targets.

“We’re looking for brands that are complementary in a number of different categories, but it’s more important that a brand has established a strong position in the market and has the beginnings of a strong consumer franchise, rather than it being from a specific place or being made in a specific way,” says Jeff Agdern, senior vice president of new brand ventures at Pernod Ricard, which has been actively investing in craft brands this year. Pernod’s recent acquisitions include Texas-based Firestone & Robertson Distilling Company in August and Kentucky-based distiller Rabbit Hole in June. In recent weeks, Pernod struck again, agreeing to acquire Castle Brands and its Jefferson’s Bourbon label for $223 million. Jefferson’s rose 15% to 80,000 cases last year, according to Impact Databank, earning “Hot Prospect” honors.

As Pernod continues to build its whiskey stable, Constellation is nurturing its Utah-based High West brand, acquired in the fall of 2016 for $160 million. “We’re beginning to get more points of distribution for High West,” Constellation CMO Jim Sabia recently told SND. In 2018, High West crossed the 100,000-case mark on a 31% volume rise. The distillery has been targeting the on-premise with its “core four,” Rendezvous Rye ($60), Double Rye! ($35), American Prairie ($35), and Campfire ($65).

Bacardi, meanwhile, has been developing the Kentucky-based Angel’s Envy brand, which it acquired in 2015. Angel’s Envy, which is part of Bacardi’s Incubation Brands division, is now above 80,000 cases in volume. The brand opened a downtown Louisville distillery and visitor center in 2016 on a $27 million investment. Similarly, Proximo has been bolstering its North American whisk(e)y portfolio, including its 2018 purchase of Pendleton Canadian whisky from Hood River Distillers for $205 million, as well as its previous acquisition of Stranahan’s in Colorado. Pendleton earned Impact “Hot Brand” honors after crossing 300,000 cases last year.

Edrington has likewise been diversifying its range, taking on sales, marketing, and distribution for Wyoming Whiskey last year. That move followed Rémy Cointreau’s acquisition of Seattle’s Westland Distillery in 2016. Also in Washington state, Moët Hennessy acquired Woodinville Whiskey Co. for an undisclosed sum in 2017. “We’ve been growing Woodinville’s distribution very prudently, expanding from its home base in Washington into Oregon and Northern California,” notes Moët Hennessy CEO Philippe Schaus. Diageo also made a play in the Pacific Northwest when its Distill Ventures brand incubator invested in House Spirits’ Westward American single malt whiskey, based in Portland, Oregon. Westward is a 45% abv, non-age statement bottling made from Pacific Northwest-sourced barley that retails at $85.

Elsewhere, William Grant & Sons took control of New York-based Tuthilltown Spirits in 2017, after previously acquiring the company’s Hudson Whiskey brand. Tuthilltown has a 36-acre distillery, restaurant, and visitor center, as well as several local craft spirits brands. In 2018, the Hudson Whiskey label stood at 19,000 cases in the U.S.—Kimberly Tharel

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