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Diageo The Latest To Target The Craft Whiskey Space

November 4, 2022

Earlier this week, Diageo announced a deal to acquire Texas craft player Balcones Distilling for an undisclosed sum. Balcones previously had a national partnership with Davos Brands, which Diageo acquired in 2020 for up to $610 million. The Waco-based Balcones opened a $33 million distillery in 2016 with a capacity of around 3 million bottles (250,000 cases).

“The Balcones team are true innovators and pioneers in the emerging American Single Malt and Texas whisk(e)y movements, and their super premium plus whiskies are highly complementary to our whisk(e)y portfolio,” said Diageo NA president Claudia Schubert.

Diageo’s play for Balcones comes as some of the top spirits companies in the U.S. sharpen focus on high-potential craft spirits brands. This summer, Pernod Ricard established an American Whiskey Collective, aiming to markedly expand the presence of brands like Jefferson’s, Rabbit Hole, Smooth Ambler, and TX in the coming years. “The result will be further accelerated growth from a ‘new fashioned’ whiskey portfolio focused on pushing boundaries rather than adhering strictly to tradition,” said Pernod Ricard North America chairman and CEO Ann Mukherjee.

Heaven Hill Brands acquired craft spirits group Samson & Surrey for an undisclosed sum in February. The deal includes Tequila Ocho, Widow Jane American Whiskey, Few Spirits, Brenne French Whisky, Bluecoat Gin, and Mezcal Vago. Samson & Surrey’s annual sales are at approximately $40 million and growing at 60%. According to Allan Latts, co-president of Heaven Hill, the deal is part of a larger trajectory of Heaven Hill’s acquisition and product development efforts in recent years, which have included everything from Deep Eddy to Black Velvet to Carolans.

“For Heaven Hill, we need to premiumize our portfolio to make sure that we have products in the core price and categories that consumers are looking for, and to ensure that we have a platform to really grow premium products,” Latts notes. “While craft means a lot of things to a lot of people, we saw this as a set of brands that sparked enough consumer interest and attention that they could all become dominant brands in their categories in their own right, so we saw an opportunity with this portfolio.”

Impact has a full report on the craft spirits segment in its October 15 issue. Click here to subscribe.

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