November 1, 2014 – Diageo has declined to comment on a Wall Street Journal report that the drinks giant and Mexico’s Beckmann family-controlled Casa Cuervo are close to announcing a deal that would give Diageo full control of the Don Julio tequila brand and cash in exchange for the Bushmills Irish Whiskey brand and the Old Bushmills Distillery in County Antrim, Ireland. The Beckmann family, which traces its roots back to Jose Cuervo founder Don Jose Antonio de Cuervo, has been a partner with Diageo in Jose Cuervo since 1989, and the two each own 50% of the Don Julio brand following a 2003 deal in which Diageo sold Casa Cuervo half of the brand for $100 million (USD). Diageo spokeswoman Zsoka McDonald declined via email Saturday night to comment on the Journal’s report, citing a company policy against commenting “on speculation.”
The WSJ story, citing sources familiar with the deal, indicates an announcement could come as early as this week and would give Diageo the larger stake of the US tequila market that company executives have sought for several years. During 2011 and 2012, Diageo had offered the Beckmanns more than $3 billion to acquire the remaining 55% stake in Jose Cuervo, according to various news reports. After talks broke down at the end of 2012, Diageo ended its US distribution deal for Jose Cuervo on July 1, 2013.
While this would be the largest whisky investment for the Beckmann family, they are not strangers to the whisky business. The family also owns Proximo Spirits, which produces Stranahan’s at its distillery in Denver and bottles Tin Cup in Colorado from spirit distilled at MGP-I in Lawrenceburg, Indiana. Proximo also owns the Lawrenceburg bottling plant that was historically part of the former Seagram’s complex, but which MGP Ingredients chose to sell when it acquired the distillery.
If the deal is completed, it would get Diageo out of the Irish Whiskey sector, which it entered when it acquired Bushmills from Pernod Ricard in 2005. Pernod Ricard acquired Bushmills in 1988 as part of its deal with Irish Distillers, but agreed to sell the brand and distillery to help clear the way for its acquisition of Allied Domecq later that year. While Diageo had high hopes for success with Bushmills initially, the brand has not been a major player in the global boom in Irish Whiskey sales over the last ten years. Pernod Ricard’s Jameson brand has increased its market share, while William Grant & Sons-owned Tullamore Dew has cemented its hold on second place in the Irish Whiskey market.
This story will be updated as more details are available.
Editor’s note: This story was updated with a response from Diageo.