November 20, 2013 – Analysts have been predicting ever since Beam Inc. became a standalone spirits company that Diageo would launch a takeover bid at some point, since the company’s Bourbon portfolio would mesh with Diageo’s one weak spot in the U.S. market. Diageo CEO Ivan Menezes threw cold water on those predictions Tuesday in London following his first investor meeting as CEO, saying that the company will not only put the brakes on its recent acquisition spree, but that it doesn’t need Beam at all.
Reuters reports Menezes unveiled plans for at least two new Bourbon brands to debut during 2014. Orphan Barrel will retail for between $75-125 USD per bottle when it hits the market early next year, while Blade & Bow will be launched later in the year. Menezes also cited the success of Bulleit Bourbon, which he estimated will sell around 600,000 cases this year, and could expand to a million cases. Menezes also plans to expand Bulleit distribution internationally. He described Diageo’s North American whiskey portfolio as strong, with around 23% of the market counting sales for Bulleit, Crown Royal, George Dickel, and 7 Crown whiskies.
However, Diageo has yet to address the upcoming supply problem for Bulleit. As WhiskyCast reported exclusively in September, Diageo will need to find a new source for Bulleit at the end of next March. Four Roses has supplied the new make spirit for Bulleit since Tom Bulleit launched the brand in 1987, but has exercised a six-month termination clause in its contract with Diageo. The company does not have a working distillery of its own in Kentucky, but sources within the company indicate that plans have been in the works to reopen the Stitzel-Weller distillery for the first time since 1993.
It should be noted that Menezes did not address where the two new Bourbons would come from. The company does not routinely comment on inventory levels, so it’s not clear whether any remaining Stitzel-Weller whiskey remains in the distillery’s warehouses. Diageo sources some of its whiskies from the MGP-I distillery in Lawrenceburg, Indiana — but those whiskies would not be able to carry the “Kentucky Straight Bourbon” designation. If Diageo chose to replace the Four Roses supply for Bulleit with whiskey from MGP-I, Bulleit’s labeling would eventually have to be changed for the same reason.
Menezes declined to comment on the delay in a ruling from the UK’s Office of Fair Trading on its United Spirits acquisition and the future of Whyte & Mackay. That ruling was originally expected in August, but has been delayed several times without explanation.
Editor’s note: WhiskyCast has asked Diageo spokesmen for comment on the source of the new Bourbons and the Bulleit supply situation. This story will be updated when we receive a response.