Diageo Trades Bushmills for Don Julio Tequila

November 3, 2014 – As expected, Diageo has announced a deal in which it will swap the Bushmills Irish Whiskey brand with Jose Cuervo Overseas for the remaining 50% of the Don Julio Tequila brand and $408 million (USD) in cash. The deal was first reported Saturday by the Wall Street Journal, and confirmed by Diageo before the start of stock trading in London this morning. The swap is expected to be completed in early 2015, and Diageo spokeswoman Lisa Crane told Bloomberg News that all of the current Bushmills employees will stay with the brand once the transition is completed.

The move gives Diageo complete control of one of the fastest-growing premium tequila brands, while shedding an underperforming asset in Bushmills. During a conference call with analysts and reporters last July, Diageo CEO Ivan Menezes acknowledged that Bushmills has failed to capitalize on the recent boom in Irish Whiskey sales. “We have tried hard over the years to get this brand into growth, and we’ve struggled,” he said at the time.  Diageo acquired Bushmills in 2005, just as the Irish Whiskey market was starting to record double-digit sales increases annually based on renewed worldwide  interest in Irish Whiskey. Bushmills sales remained relatively stagnant, though, and the brand is #3 in sales behind Jameson and Tullamore Dew.

The two companies have been partners in Don Julio since 2003, when Diageo sold a 50% interest in the brand to the Beckmann family-controlled Jose Cuervo. They spent almost two years negotiating a sale of the flagship Jose Cuervo brand, in which Diageo owns a 45% interest, but broke off talks at the end of 2012 after failing to reach an agreement that would have seen Diageo pay more than $3 billion for control of the brand.

Links: Bushmills | Diageo

 

Mark Gillespie

I'm the host and executive producer of WhiskyCast.

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