The biggest drinks acquisitions of 2019
As 2019 draws to a close, we round up a year of acquisitions which has seen two prominent British brewers snapped up by foreign investors, Constellation Brands agree a wine sale worth over US$1 billion, and the break-up of retailers Naked Wines and Majestic.
Constellation Brands has certainly been one of the most active in the acquisitions scene this year, taking both majority and minority stakes in a number of companies.
Its sale of just under 30 wine brands to E&J Gallo, however, was one of the biggest in the drinks industry this year.
In the UK, if 2018 was the year of the Conviviality collapse, 2019 marked the split of retailers Majestic and Naked. It was also an important year for the UK beer and pub industry, with a number of high profile deals involving Fuller’s, Greene King and Stonegate.
Elsewhere, this year has seen Campari invest heavily in rum, AB InBev sell off its Australian subsidiary, Diageo invest in non-alcoholic drinks for the first time, and a Chinese firm purchase a prominent Scotch producer.
Other major drinks deals this year, not mentioned in the following pages, include the Chanel Group investing in a wine estate on an island off Provence, Champagne co-operative Nicolas Feuillatte purchasing Champagne house Henri Abelé from the Freixenet Group, The Michelin Guide buying wine newsletter The Wine Advocate, Amber Beverage Group acquiring UK drinks distributer Cellar Trends, Diageo buying draught cocktails company Tipplesworth, Bacardi forking out on US whiskey and vodka producer Stillhouse Spirits and Pernod Ricard buying premium Italian gin brand, Malfy.
While only acquiring a 55% and 50% stake respectively, it is also worth noting LVMH’s investment in Provence rosé producer Château d’Esclans – the maker of Whispering Angel – and Amorim buying into glass closure business Vinolok.
While not strictly a drinks deal, LVMH’s acquisition of American jeweller Tiffany & Co for US$16.2 billion was the largest acquisition in its history.
Click through for a reminder of some of the biggest deals that were finalised in 2019…
In one of the major deals of the year, Constellation Brands announced plans in April to offload around 30 of its lower priced wine brands and related facilities to Californian wine giant E&J Gallo.
However, in May, the US1.7 billion deal hit a snag, after both companies received requests for additional information from the US Federal Trade Commission in connection with a review of the transactions submitted.
In a statement published this month, Constellation announced it had downgraded its deal from $1.7bn to $1.1bn due to “competitive concern primarily related to the sparkling wine, brandy, dessert wine, and concentrate categories”.
As such, Constellation will retain brands in these categories and “will pursue other opportunities to divest the brands excluded from the agreement with E. & J. Gallo”. It said it was considering offloading these brands, as well as the concentrate business, to companies “whose business strategies better align with the brands”.
The brands now not being sold to E&J Gallo include Cook’s California ‘Champagne’, J. Roget American ‘Champagne’, and Paul Masson Grande Amber Brandy, which combined, sell around five million cases per year.
In a separate deal, Constellation has also agreed to sell its New Zealand wine brand Nobilo and its related assets for $130m to Gallo. This transaction, which is also subject to regulatory approval, is expected to close in the first half of the 2021 fiscal year.
Constellation has certainly not held back this year. In August it agreed to sell Black Velvet Canadian Whisky to Heaven Hill Brands for US$266m in a deal which includes a production facility and other Canadian whisky brands made at the site.
In May it also acquired a majority stake in Tennessee Bourbon distillery Nelson’s Green Brier for an undisclosed sum, after initially investing in the business in 2016.
Most recently, however, it announced the sale of San Diego’s Ballast Point to Illinois-based Kings & Convicts Brewing Co. for an undisclosed sum. Constellation bought the brewery in 2015 for US$1 billion in 2015, but reports suggest that it is now only worth $28 million.
This year E&J Gallo also acquired Napa Valley’s acclaimed Pahlmeyer Winery, including its two brands Pahlmeyer and Jayson by Pahlmeyer, boosting its premium portfolio which includes Orin Swift, J Vineyards and Talbott.
In August this year, the retail and commercial division of Majestic Wine was sold to investment group Fortress for £95 million. The sale included all but one of Majestic’s stores, its website, the commercial on-trade business, the French division (Les Celliers de Calais), and its headquarters. However, it did not include fine wine division Lay & Wheeler.
In October, Naked Wines confirmed the sale of Lay & Wheeler for £11.3 million.The fine wine merchant, which dates back to 1854, making it one of the oldest in the UK, has been sold to an international private company, Coterie Limited, along with Vinotheque Holdings Limited, which is the landlord of Vinotheque Ltd, a 100% subsidiary of London City Bond (LCB) which provides the warehousing and storage of Lay & Wheeler.
A Naked Wines spokesperson told the drinks business that the buyer, Coterie, is a “privately held family office”,
Earlier this month, Majestic confirmed the completion of the sale to Japanese-owned US firm Fortress, stating that the 140 stores that had been earmarked for closure under the previous owners Naked will all remain open.
Speaking to the drinks business last month as it revealed its new range, returning executive chairman Colley, who was managing director of the UK retailer between 2015 and 2017 said the retailer was “getting back to what we do well”.
As part of the transaction, Asahi now has the right to sell AB InBev’s portfolio of brands within Australia. AB InBev stated that the sale will help to “accelerate its expansion” into other markets within the Asia-Pacific region as well as globally.
The proceeds from the deal will be used to pay off AB InBev’s debt, although it said that its goal to reach a net debt to EBITDA (earnings before interest, taxes, depreciation, and amortisation) target ratio of below 4x by the end of 2020 is not dependent on this transaction going through.
The deal is subject to closing conditions and regulatory approval, and if given the go ahead, is expected to be completed by the first quarter of 2020.
AB InBev has also conducted a number of other high profile deals this year. In November it performed a u-turn after turning down a deal to acquire the rest of Craft Brew Alliance in August, announcing the purchase of the whole company in an estimated US$321 million deal.
This year it also acquired San Diego-based Cutwater spirits, which was founded by three former Ballast Point Brewing executives, and Cleveland-based Platform Beer Company – one of the fastest growing independent breweries in the US.
Its venture capital arm, ZX Ventures, also bought the remaining stake in consumer review site Rate Beer this year.
Asahi has had a busy year. Back in January it snapped up well-known UK brewer Fuller’s, based in Chiswick. The deal included flagship brand London Pride, the historic Griffin Brewery and Fuller’s entire brewing operation, in addition to its brands Cornish Orchards cider, Dark Star Brewing and Nectar Imports, wine wholesaling enterprise and drinks distribution network.
The sale means that Fuller’s is now solely a pub and hotel operator.
This, the company stated at the time, is the “core of the business” and generates 87% of its operated profits. The deal will provide “significant capital to accelerate investment in the premium pubs and hotels business both organically and through future acquisitions”.
Distill Ventures, an accelerator for small brands backed by Diageo, acquired a minority stake in non-alcoholic ‘spirit’ brand Seedlip in June 2016.
Seedlip is the second brand Diageo has acquired through the accelerator programme, and the first that only produces non-alcoholic drinks. The acquisition also includes sister brand Æcorn Aperitifs, which launched earlier this year, a spokesperson told db at the time.
Ben Branson, Seedlip’s founder, said that both Diageo and Distill Ventures’ “shared belief in our vision has enabled us to build a business that’s ready for scale and I’m excited to continue working with Diageo to lead this movement”.
Another drinks giant not standing still this year is Campari. In September this year it completed its acquisition of French rhum agricole brands Trois Rivières and La Mauny for €60 million.
Campari has entered into negotiations with Compagnie Financière Chevrillon in July with a view to acquire Rhumantilles, a producer of several “iconic” rhum agricole brands.
Campari said in a statement: “With this acquisition Campari Group will add prestigious agricole rum brands to its offering and enhance its exposure to rum, a premiumising category currently at the heart of the mixology trend and growing cocktail culture. Moreover, Campari Group will add significant critical mass in France, poised to become one of the Group’s strategic markets.”
The company has also completed the sale of its historic mansion Villa Les Cèdres in St-Jean Cap Ferrat. First announced on 1 August, the sale of the luxury property was completed on 31 October in a sale worth €200m of which Campari will retain €80m.
The house and its botanical gardens were once the property of King Leopold II of Belgium and was acquired by Campari when it bought Société des Produits Marnier-Lapostolle – the makers of Grand Marnier – in 2016.
In October, the Campari group also bought a controlling stake in two spirits companies, including super-premium mezcal producer Montelobos Mezcal. The Italian spirits company has brought a 51% stake in Casa Montelobos S.A.P.I. de C.V., which owns super premium artiscan mescal brand Montelobos, and Licorera Ancho Reyes y CIA S.A.P.I. de C.V., brand owner of Ancho Reyes spicy liqueur for USD35.7 million (€32.7 million).
In August Li Ka-shing, Hong Kong’s richest man and the owner of property developer CK Asset, reached an agreement to buy the British brewer Greene King for 850p per share (a 51% premium) which is £2.7bn in total.
Li Ka-shing, a 91-year-old multibillionaire, also owns pharmacy chain Superdrug and mobile operator Three.
Greene King chief executive Nick Mackenzie said at the time that CK Assests, “understand the strengths of our business and we welcome their commitment to working with the existing management team, evolving the strategy and investing in the business to ensure its continued long-term growth.”
Based in Suffolk, Greene King owns 2,700 pubs, restaurants and hotels across the country.
In July, pub group Stonegate, which owns Be At One and Slug & Lettuce, announced its intention to acquire the Ei Group in a deal worth £3 billion.
Stonegate Pub Group wished to take ownership of Ei’s 4,000-strong pub estate, adding to its current portfolio of 765 sites, which includes bar chains Yates and Walkabout.
However, the deal hit a stumbling block in October when the UK’s Competition and Markets Authority (CMA) launched an investigation into the deal.
In a statement this month, CMA said that both parties must address the concerns raised during the investigation, which include increased prices for customers. It is expected this will involve the sale of several sites.
In June, it was announced that Franco-Israeli media tycoon and art collector Patrick Drahi had acquired auction house Sotheby’s for US$3.7 billion.
The move returned Sotheby’s, which is one of the world’s leading fine wine and spirits auctioneers, to private hands after 31 years as a public company. Shareholders were reportedly paid $57 per share and the final offer represented a premium of 61% on Sotheby’s closing price on 14 June this year.
The producer of Glen’s vodka, Loch Lomond, was acquired by a Chinese buyout firm in a deal worth over US$500 million (£395 million) in June.
Hill House Capital bought the Scottish spirits producer, which also makes Glen Scotia and Loch Lomond whisky labels, after a five-year project to expand its international business.
Loch Lomond, founded in 1843, was owned by the Bulloch family until it was acquired by PE firm Exponent in 2014.
It is understood that Hill House Capital paid between $500 million and $550 million to purchase the distillery, according to Scottish Field.
In May, Boston Beer Co, which produces Sam Adams, agreed to buy Dogfish Head Brewery in a deal which sees two of the country’s pioneering craft breweries join forces.
The acquisition, which is estimated to be worth $300 million, was the largest in Boston Beer’s history.
Boston Beer has also put forward $173 million to buy back a stake in the Delaware brewery currently owned by private equity firm LNK Partners.
Chilean wine giant VSPT announced in January this year that it intended to acquire a number of wine brands and vineyards, as well as a winery, from Pernod Ricard Argentina for an undisclosed sum.
According to Cronista, the brands involved in the deal are reported to be Graffigna, Colón and Santa Silvia. In addition, VSPT will also be taking control of the Graffigna winery and vineyards Pocito and Cañada Honda in San Juan and La Consulta in the Uco Valley in Mendoza.
Pernod Ricard Argentina has decided to focus its attention and resources on the production of both still and sparkling wines at its Salta and Mendoza based wineries, as well as spirits at its distillery in Buenos Aires.
VSPT has referred to the deal as a “strategic acquisition to continue the development of its product portfolio”. The wine group already controls Argentine wine brands Finca La Celia and Bodega Tamarí.
Bordeaux fifth growth Château Dauzac and Margaux third growth Château Cantenac Brown sold
This month there has been two separate high profile Bordeaux sales. The first was Margaux’s Cantenac Brown which has been sold to Frenchman Tristan Le Lous for an estimated €150 million.
Commenting on the sale, the new owner said: “The first glance of Château Cantenac Brown can really make your heart swell. Every time I see the Tudor-style castle overlooking the Gironde estuary through the morning mist I have a strong emotional reaction.”
In a statement issued by the new owners, it was revealed that a large investment plan is planned which will, among other things, add a new winery with a vat room that will allow parcel vinifications.
Also taking place this month was the sale of Bordeaux fifth growth Château Dauzac to French businessman Christian Rolleau.
The Margaux property has been owned by French insurance group MAIF for 30 years but rumours of a proposed sale had been circulating for some time.
Dauzac has a 120 hectare estate, including 49ha of vineyards in Margaux and a small 2ha plot in Haut-Médoc.
The financial details of the sale have not been made public but could be in the region of €120 million.