Diageo to Buy Ryan Reynolds's Gin, Other Brands for Up to $610 Million -- 2nd Update
17 August 2020 - 6:23PM
Dow Jones News
By Jennifer Maloney
Diageo PLC has agreed to pay up to $610 million to acquire
Aviation American Gin, which is partly owned and pitched by actor
Ryan Reynolds, and other brands in its latest bet on a
celebrity-backed premium liquor.
The world's largest liquor maker said it would make an initial
payment of $335 million and a further potential consideration of up
to $275 million based on performance over 10 years. The deal is
expected to close by the end of the year.
Diageo is buying Davos Brands LLC, a New York-based distributor
and producer of Aviation American Gin and other liquors. Mr.
Reynolds, who bought an undisclosed stake in Aviation in 2018, will
retain an ongoing interest in the brand following the deal, the
companies said.
Mr. Reynolds, a Hollywood star best-known for his leading role
in "Deadpool" superhero films, has appeared in the brand's
advertising. The gin is produced at a craft distillery in Portland,
Ore.
Aviation's U.S. sales rose from about $20 million in 2018 to
about $40 million in 2019, or 1.3% of the U.S. gin market,
according to data from Euromonitor.
Jefferies estimates the brand sold about 96,000 cases last year.
Analyst Edward Mundy says the brand has been growing rapidly, but
Diageo is paying a high multiple of sales.
"Whilst we recognise that Aviation provides a new growth engine
for the key U.S. market, we would have preferred to see investment
into a category with higher barriers to entry than gin," Mr. Mundy
wrote in a research report.
U.K.-based Diaego, maker of Johnnie Walker Scotch, Smirnoff
vodka and many other brands, has a long history betting on pairing
up with celebrities to push premium drinks.
In 2007, Diageo teamed up with Sean "Diddy" Combs on Ciroc
vodka. In 2017, Diageo agreed to pay up to $700 million to buy
upscale tequila brand Casamigos, which was co-founded by actor
George Clooney.
"The acquisition of Aviation American Gin and the Davos Brands
portfolio is in line with our strategy to acquire high-growth
brands with attractive margins that support premiumization," Diageo
Chief Executive Ivan Menezes said.
Along with Aviation, Diageo will acquire the other brands in the
Davos Brands portfolio, including Astral Tequila, Sombra Mezcal and
TYKU Sake.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
August 17, 2020 12:08 ET (16:08 GMT)
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