Diageo agreed to acquire Don Papa Rum, a super-premium, dark rum from the Philippines, for at least €260 million
On January 17, 2023, UK alcoholic beverage company Diageo announced that it had reached an agreement to acquire Don Papa Rum, a super-premium, dark rum from the Philippines.
The upfront consideration is €260 million, with a further potential consideration of up to €177.5 million, through to 2028, subject to performance, reflecting the brand’s current growth potential.
The acquisition, according to Diageo, will enable it to strengthen its position in the exciting rum category, which is in the early stages of premiumization and has a compound annual growth rate (CAGR) of 18% in Europe and 27% in the US between 2016-2021.
Don Papa Rum was founded by ex-Rémy Cointreau executive and entrepreneur Stephen Carroll, together with Andrew John Garcia. It has gone from strength to strength since its launch in 2012, consistently outperforming the market in Europe. It is currently available in 30 countries, with France, Germany, and Italy being its largest markets.
The rum has a unique flavor profile, highly distinctive packaging, and an authentic brand story. During a trip to Bacolod, in the Philippine island of Negros, Carroll heard stories of the area having the finest sugar cane in the world.
Until that time, rum from the Philippines had been distilled in other areas of the country. Siezing the opportunity, Carroll and Garcia then founded the Bleeding Heart Rum Company to manufacture rum in the island, which is considered the sugarcane capital of the country, and known locally as ‘Sugarlandia.’
The combination of local sugar cane and oak barrel ageing in a hot tropical climate provides the foundation for Don Papa Rum’s long, rich-textured finish, which carries flavors of vanilla, honey, and candied fruits.
Don Papa Rum’s namesake is inspired by the unsung hero and mystic, Papa Isio, who was one of the leading figures of the late 19th century Philippine revolution. Initially a foreman at a sugar plantation, his leadership and courage played a critical part in liberating the island of Negros from Spanish rule. Don Papa is inspired by his legend and captures his spirit and sense of magic in every bottle.
Carroll will remain involved with the brand, working alongside Diageo to build on Don Papa Rum's growth potential. The acquisition will be funded through existing cash reserves and is expected to close in the first half of 2023.
About Diageo
Diageo plc (LSE:DGE), together with its subsidiaries, produces, markets, and sells alcoholic beverages. The company offers scotch, whisky, gin, vodka, rum, ready to drink products, raki, liqueur, wine, tequila, Canadian whisky, American whiskey, cachaca, and brandy, as well as beer, including cider and non-alcoholic products. It provides its products primarily under the Johnnie Walker, Guinness, Tanqueray, Baileys, Smirnoff, Captain Morgan, Crown Royal, Don Julio, Ciroc, Buchanan's, Casamigos, J&B, and Ketel One brands.
The company operates in North America, Europe, Turkey, Africa, Latin America, the Caribbean, Asia Pacific, and internationally. The company was incorporated in 1886, has about 28,558 employees worldwide, and is headquartered in London, the United Kingdom.
Since 1990, Diageo’s share price has risen 998%…
Earnings grew by 22.1% to UK£3.2 billion over the past year, and are forecast to grow by 9.04% per year, over the next three years…
Although Diageo has a high level of debt, it has more than enough cash (UK£2.42 billion) to pay for Don Papa Rum’s acquisition (€260 million)…
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The content is sourced, excerpted, and edited from Diageo, Don Papa Rum, and S&P Global Market Intelligence. It is for informational purposes only, and is neither an offer to buy or sell securities nor investment advice. Forward-looking statements may be uncertain and historical returns may not predict future performance. The International Investor is not a registered broker-dealer, investment adviser, or fiduciary.