Diageo to acquire Ypioca in Brazil

Diageo has taken a foothold into the caipirinha market after reaching agreement to purchase Ypioca for R$900m (£300 million).

Ypioca is a premium version of cachaça, which is a distilled from fermented sugarcane juice, and forms the base of Brazil’s national cocktail.

Cachaca is the largest spirits category in Brazil and Ypioca is the number two by value and number three by volume in the overall cachaca category.

The transaction will be completed in about a month.

Brazil is hosting the Olympics and soccer World Cup in the next four years and is seen as a rapidly growing market.

“This investment represents the continuation of our strategy to increase Diageo’s presence in the fastest growing economies of the world,” said chief executive of Diageo Paul Walsh said in a statement.

“Brazil is an attractive, fast growing market for Diageo with favourable demographics and increasing disposable incomes. The acquisition of Ypioca gives us the leading premium brand in the largest local spirits category.”

Diageo will hope to push Ypioca internationally but another important aspect to this acquisition is that new distribution avenues are now available to Diageo in the north east of Brazil where Johnnie Walker and Smirnoff are less well-known.