Diageo toasts £300m Brazil deal
May 29 2012
Smirnoff-to-Guinness firm Diageo has unveiled a £300 million deal that will see it acquire a leading brand of Brazil's national drink.
Cachaca, which is made from sugar cane, has its roots as a working man's drink but is now increasingly popular with middle class consumers, particularly in the cocktail caipirinha.
The deal with Ypioca gives Diageo the second biggest cachaca brand by revenue and the third biggest by volume, with net sales of around £60 million in 2011.
The acquisition of the so-called "Brazilian rum" marks an expansion in Diageo's Latin American business, which already sells Venezuelan dark rums Cacique and Pampero, and distributes Mexico's leading tequila brand Jose Cuervo.
Chief executive Paul Walsh said: "Brazil is an attractive, fast growing market with favourable demographics and increasing disposable incomes.
"This acquisition gives us the leading premium brand in the largest local spirits category. It will also provide Diageo with an enhanced platform from which to accelerate the long-term growth of our premium international spirits brands in Brazil."
Diageo reported 23% net sales growth in Latin America in its half year results to December 2011, the greatest jump across all regions worldwide.
The acquisition will more than double the Brazilian business for Diageo, whose current cachaca offering comprises only the small Nega Fulo brand.
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