‘Jewels’ and a new distillery — Norwalk giant eyes buys in 2019
NORWALK — With a new whiskey distillery planned in Kentucky, the head of Diageo North America suggested this week the company is scouting additional acquisitions of trendy labels to boost its prospects next year and beyond.
In a Wednesday conference call with investment analysts, Diageo’s president of North American operations Deirdre Mahlan described the company as holding “an enviable position” in her words today despite under-perfoming the overall market in its 2018 fiscal year, with scale twice the size of its next biggest competitor in the region.
Diageo is based in London and has its main regional office in Norwalk, with brands including Crown Royal, Johnnie Walker and Bulleit whiskeys; Guinness beer; Captain Morgan rum; Smirnoff and Ciroc vodka; Don Julio and Casamigos tequila; and Bailey’s liqueur.
Diageo unveiled this week plans to build a third major whiskey distillery in Kentucky, at an expected cost of $130 million. In August, Diageo opened a tourist brewery in Relay, Md., with more than 100,000 people visiting in the first three months of operation.
“While this is an attractive and profitable market, it is also one that has been evolving rapidly in terms of how consumers socialize and celebrate,” Mahlan said Wednesday, as quoted in a transcript of the conference call posted online by Diageo. “Our strategy in the U.S. ... focuses on driving recruitment of consumers into our portfolio by winning with the right brands, in the right occasions and at the right price.”
Mahlan cited Casamigos as an example of Diageo latching onto fast-growth brands “in exciting categories where we believe we are underweight” as she worded it Wednesday. Diageo acquired Casamigos last year in a deal that could hit $1 billion if sales targets are reached, with the tequila brand created by actor George Clooney and two others.
“The Casamigos brand was built primarily ... around the concept of being ‘made by friends for friends,’ as reflected in the name,” Mahlan said. “Since the acquisition we have continued to execute this (and it’s) highly rated amongst bartenders and consumers. ... We now have two jewels in this high-growth category.”
Mahlan said the company’s Diageo Beer division has made gains in the past year, both on sales of Guinness as well as malt beverages and other bottled drinks like Smirnoff Spiked Seltzer, whose competitors include Norwalk-based SpikedSeltzer acquired two years ago by Anheuser-Busch InBev.
Heading into 2019 and beyond, Mahlan suggested Diageo has an eye on tapping its own reserves in 2019 and beyond to add new labels through acquisitions.
“What we do is look at what the consumer trends are and then make decisions about whether or not we believe our current brand portfolio is best positioned to capture them — whether we’ll innovate and grow organically ... or whether we think there’s an opportunity to acquire brands in the market to best capture that growth,” Mahlan said. “A significant and material number of new brands ... have been launched, which is exciting for the industry and for the category, and that’s something that we’ll continue to evaluate opportunities on where we might be able to acquire additional brands in the future.”
Alex.Soule@scni.com; 203-842-2545; @casoulman