Drinks giant Diageo has agreed to acquire the Brazilian cachaça brand, Ypióca, for approximately £300 million in cash.
Diageo will purchase the brand from Brazil’s Ypióca Agroindustrial Limitada, along with certain production assets, including a distillery in Paraipaba, Ceará, a bottling plant in Fortaleza, Ceará, and a warehouse in Guarulhos, São Paulo.
Expected to complete in around one month, the deal will expand Diageo’s presence in Brazil and enhance its access to a growing group of middle-class consumers who are driving the growth of premium brands in the country.
Cachaça is the largest spirits category in Brazil and Ypióca is the leader in the growing premium cachaça segment. It is number two by value and number three by volume in the overall cachaça category.
Ypióca has an extensive sales and distribution network in north-east Brazil and the second largest retail penetration nationwide. It has an eight per cent market share of the total cachaça category, with 6.6 million 9L cases.
CEO of Diageo Paul Walsh commented: “Brazil is an attractive, fast growing market for Diageo with favourable demographics and increasing disposable incomes. The acquisition of Ypióca 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.
“The acquisition meets our return criteria and will be accretive to Diageo’s top line growth. This investment represents the continuation of our strategy to increase Diageo’s presence in the fastest growing economies of the world.”
Headquartered in London, UK, Diageo trades in approximately 180 markets, employing over 20,000 people. The company has offices in 80 countries and manufacturing facilities worldwide. Its brands include Johnnie Walker, Smirnoff, Baileys, Captain Morgan, Jose Cuervo and Guinness.