Diageo buys Brazilian cachaça brand Ypióca

28 May, 2012

Diageo, the world's leading premium drinks business, has announced that it has reached agreement with Ypióca Agroindustrial Limitada to buy cachaça brand, Ypióca, and certain production assets.

Cachaça is the largest spirits category in Brazil and Diageo says Ypióca is the leader in the growing premium cachaça segment. Number 2 by value and number 3 by volume in the overall cachaça category. According to Drinks International’s Millionaires survey last year, Ypióca sold 6.89 million cases in 2010 and was the 29th largest spirits brand in the world and the fourth biggest cachaça brand.

The deal amounts to BRL900 million (Brazilian Real approximately £300 million) in cash and the transaction is expected to complete in a month.

It expands Diageo’s presence in Brazil and, it says, enhances access to the growing number of middle class consumers who are driving the growth of premium brands.

Diageo says Ypióca has net sales of BRL177 million (approximately £60 million) based on the pro forma adjusted figures as of December 2011.

In addition, Ypióca has an extensive sales and distribution network in the north east of Brazil and the second largest retail penetration nationwide.

Diageo CEO Paul Walsh said: ”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.”

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