The latest European drinks company to buy out a local producer in Latin America and the Caribbean was Gruppo Campari with the acquisition of Jamaican rum maker Lascelles deMercado & Co. This constitutes Campari’s third-biggest acquisition.
The Italian company has acquired 81.4% of Lascelles, whose brands include Appleton Estate, Wray & Nephew and Coruba, and plans to buy the rest by the end of the year. It is buying the Jamaican firm from CL Financial, and the entire deal will cost it $414.8 million. [. . .] Mr. Kunze-Concewitz said the move will make the Americas contribute 40.4% of the global company’s revenue.
Lascelles marks Campari’s third-biggest acquisition, after Wild Turkey and Skyy Spirits–bought in 2009 and 2001, respectively–and its first rum brand. This is the latest step in Campari’s strong acquisition policy, which led to a number of deals in the past years. In 2011 alone, the company bought Brazilian Sagatiba, which produces the local drink cachaca, and Russian distributor Vasco International. Kunze-Concewitz said that although there is still financial capacity for more acquisitions, the company will more likely spend the next few months to “digest” the latest operation.
Global beverage companies are competing more fiercely than ever for a leading position in Latin America, a crucial growth region for the industry. The strategy is partly a reaction to the torrid conditions they are facing in Western Europe, as recessions and subsequent government austerity measures force drinkers to spend less.
The U.K.’s Diageo PLC (DGE.LN), owner of Guinness stout and Johnnie Walker whisky, last month said it remains in close talks with Mexico’s Beckmann family over a reported $3 billion deal for tequila giant Jose Cuervo. And in May, the company bought Ypioca, one of Brazil’s biggest producers of cachaca, the country’s best-selling spirit, for 300 million pounds ($476.5 million). Diageo expects developing economies to contribute half of its global revenue by 2015, up from almost 40%.
Brewers are also being drawn to the region. Anheuser-Busch InBev NV (BUD) has so far this year acquired the 50% stake in Mexico’s Grupo Modelo SAB de CV (GMODELO.MX) that it didn’t already own for $20.1 billion, as well as gaining control of Dominican brewer Cerveceria Nacional Dominicana SA for over $1 billion.
“It’s important to have local brands in emerging markets, as these are brands that already have their own distribution lines, which companies can use to expand the market for their own brands. As for Campari’s acquisition, this is significant as it marks the company’s access to the rum market. Campari continues to expand its portfolio without overburden its financials,” said Giulio Lombardi, senior analyst at Fitch Ratings.
Mr. Kunze-Concewitz said spirits will account for more than 80% of Campari’s annual revenue following the deal.
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