Bacardi Buys Stake in Patron
John Paul DeJoria, co-founder of Patrón tequila, will become the principal owner of parent company Caribbean Distillers Corporation. In addition, Bacardi Limited will purchase a significant, although unspecified, minority stake in the company through a subsidiary, according to Barry Kabalkin, vice chairman of Bacardi Limited. Specific terms of the agreement were not disclosed.
Under the agreement, Bacardi will hold one seat on the board of directors of Patrón’s parent company. Kabalkin will be appointed to the board position.
The transaction will result in an unspecified payment to the estate of the late Martin Crowley (co-founder of Patron) in exchange for its interest in the company. In accordance with the terms of Crowley’s will, the estate will contribute the money to the Windsong Trust, a charitable trust created by Crowley to support the education of underprivileged children across the globe.
Recall that Crowley teamed up with DeJoria, who is also the co-founder and chairman of the Board of John Paul Mitchell Systems, to found Patrón in 1989.
Bacardi and Patrón intend to operate independently from each other and the agreement does not provide for changes in the day-to-day operations of Patrón or in Patrón’s management or distributor network. However, the companies said the “relationship is expected to lead to beneficial synergies.”
The parties intend to close the transaction, which is primarily subject to certain court approvals, within approximately 60 days.
“Bacardi and its brands have set many standards in the spirits industry and its worldwide experience can certainly help us grow in markets both inside and outside of the U.S.,” said Ed Brown, President and ceo of Patrón. “We look forward to gaining from their international experience as we continue to grow Patrón around the world.”
“Patrón is one of the fastest growing products in the entire spirits industry, and becoming a significant shareholder is a fantastic opportunity for Bacardi,” said Kabalkin.
BACKGROUND. Last year Bacardi launched a lawsuit at Martin Crowley’s estate to stop the payment of nearly $755 million to help underprivileged children in the third world. Crowley’s executors agreed in January 2007 that DeJoria would pay the estate $755 million for Crowley’s remaining 50% shares. The settlement was then blocked by Bacardi, which states in court papers that it had a prior agreement from 2004 with the executors to buy the stake for $175 million.
The industry has speculated for years that Bacardi, among others, may eventually acquire Patron entirely.
PERNOD TO SELL NON-CORE WINE AND VODKA BRANDS
Last week, Pernod announced it will dispose non-strategic brands over the next 12 to 18 months in effort to decrease debt levels after acquiring Vin & Sprit. Sources say that Pernod Ricard will likely divest non-core wine and vodka brands to help pay down debt, according to an article in the Financial Times.
Allegedly, the company’s wine assets are no longer considered strategic. As a result, “important wine assets in Spain and Argentina, inherited from the acquisition of Allied Domecq, are likely to be divested,” industry sources told mergermarket. French analysts slated Bodegas y Bebidas, a Spanish wine company and owner of Campo Viejo, as the most likely wine divesture. The Argentinean company Graffigna, which Pernod also inherited from Allied, is also likely to go. FT cited Constellation Brands as “a logical bidder.”
In terms of spirits, Gronstedts Cognac in Sweden is the biggest disposal planned, sources said. Up for sale is also Dry Anis in Finland, Serkova vodka in Greece, Lubuski gin in Poland and Star Gin and Red Port.
Sources were mixed on whether Pernod would consider selling Chivas, Beefeater or Kahlua, noting all brands have suffered in the current climate but were still considered strategic. Kahlua seemed to be the likeliest divestment out of the three.
NABCA VOLUMES FLAT IN JUNE
Spirits volumes for control states were flat in June, up 2.5% year to date, reports UBS analyst Melissa Earlam. Premium brands were still growing faster than the market, but at a slower pace than prior periods. For example Grey Goose grew 4.3%, Ketel One rose 4.9% and Patron was up 19%.
Diageo’s volumes declined slightly in June, falling -0.2%. The company took share in Canadian whisky (1% versus category 0%) and cocktails (6.6% vs category 1%y/y). It lost volume share in vodka (0.2% vs category 3.4%), rum (-2.5% vs category -1.9%), gin (-3.8% vs category -3%) and Scotch (-5.9% vs category -4.1%). UBS said it believes this is related to 5% price increases introduced in the U.S. over the last months.
Pernod’s volumes declined -6%. It gained share in Irish whiskey (23% vs 18%), and Scotch
(-2.8%). However, it lost share in vodka (-2.5%), gin (-5.5%), rum (-12.4%) and brandy/Cognac (-73% vs category -4%) where it is de-emphasizing VS growth.
Brown Forman volumes declined -2.8% and Remy declined -1.8%. Campari grew 4.1%, driven by strong vodka growth of +5.9%.
UBS rated Pernod and Campari Buy. Diageo and Brown-Forman were rated Neutral. It expects a slowdown in US spirits growth during the recession, but forecasts market volume growth of 1.7% and 4.5% sales for 2008.
FORTUNE BRANDS TO DECLASSIFY BOARD
Fortune Brands board of directors has unanimously approved a plan to declassify the board beginning in 2010. The plan will be subject to shareholder approval at the company's 2009 annual meeting.
The company's directors are currently divided into three classes and are elected to staggered three-year terms. If the plan announced today is approved by shareholders, the company will phase-in annual election of directors beginning at the 2010 annual meeting. As of the 2012 annual meeting, all directors would be elected on an annual basis.
A non-binding shareholder resolution calling for annual election of directors received the support of 54% of the shares outstanding at the company's 2008 annual meeting. The classified board was originally approved by shareholders in 1986.
TROUBLE FOR PAX WINE CELLARS
Pax Mahle has been fired as winemaker from his eponymous label Pax Wine Cellars and replaced by Tyler Thomas, reports Wine Spectator. Meanwhile, Mahle, his wife Pamela Schaab, and Pax’s majority owner, Joe Donelan, are locked in a legal battle over the winery.
Mahle founded the winery in 2000 along with his wife and Connecticut-based investor Donelan, who owns a 55% share. The partners have supposedly disagreed over several winemaking and management decisions, and Mahle expressed a desire for a buyout or outright dissolution of the brand. Donelan rejected a buyout offer and filed a suit against the couple.
Donelan told Wine Spectator that he intends to continue the Pax label. Mahle, meanwhile, is building a winery in Sonoma, where he plans to make a variety of wines.
FORMER PRESIDENT OF JOSEPH PHELPS DIES
We regret to inform you that Tom Shelton, the former president of Joseph Phelps Vineyards, died on Saturday night after a long battle with brain cancer. He was 55.
Shelton joined Phelps in 1992 as vice president of sales and was promoted to president in 1995, a position he held for 13 years. He was also a spokesperson for the Napa Valley Vintners, which worked to protect Napa Valley producers and to develop less restrictive direct-to-consumer shipping laws.
In a statement released Monday, the Shelton family said: "Tom was a wonderful husband, a loving father, and a great friend who will be missed very much. We are all so blessed to be touched and inspired by such a caring and outgoing individual.”
B-F INVESTS $6M IN JACK DANIEL DISTILLERY
Brown-Forman is reportedly set to invest more than $6 million in its Jack Daniel Distillery in Lynchburg, Tennessee to improve efficiency and increase output of 20 million liters a year. In all, the distillery plans to add 9 fermenters to its already 48 fermenters to increase the amount of spirit yielded from each batch of grain. Through cost savings, B-F believes it will recapture the cost of the investment in just a few months.
WSD BRIEFS:
PERNOD RICARD USA has appointed Thomas G. Krekeler, a veteran beverage alcohol Operations executive, as Plant Manager at the Wild Turkey Distillery in Lawrenceburg, KY. Krekeler will join Pernod on August 18, 2008, reporting to Dan Denisoff, senior vp, operations.
THE LOUISIANA STATE LEGISLATURE has named the Sazerac the official cocktail of New Orleans during their recent legislative session. The drink contains Sazerac Straight Rye Whiskey, Herbsaint and Peychaud's Bitters.
Until tomorrow, Megan
“Be thou the first true merit to befriend, his praise is lost who stays till all commend.”
Alexander Pope
--------- Sell Day Calendar ----------
Today’s Sell Day: 20
Sell days this month: 23
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Tues.
YTD sell days Over/Under: +0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
Under the agreement, Bacardi will hold one seat on the board of directors of Patrón’s parent company. Kabalkin will be appointed to the board position.
The transaction will result in an unspecified payment to the estate of the late Martin Crowley (co-founder of Patron) in exchange for its interest in the company. In accordance with the terms of Crowley’s will, the estate will contribute the money to the Windsong Trust, a charitable trust created by Crowley to support the education of underprivileged children across the globe.
Recall that Crowley teamed up with DeJoria, who is also the co-founder and chairman of the Board of John Paul Mitchell Systems, to found Patrón in 1989.
Bacardi and Patrón intend to operate independently from each other and the agreement does not provide for changes in the day-to-day operations of Patrón or in Patrón’s management or distributor network. However, the companies said the “relationship is expected to lead to beneficial synergies.”
The parties intend to close the transaction, which is primarily subject to certain court approvals, within approximately 60 days.
“Bacardi and its brands have set many standards in the spirits industry and its worldwide experience can certainly help us grow in markets both inside and outside of the U.S.,” said Ed Brown, President and ceo of Patrón. “We look forward to gaining from their international experience as we continue to grow Patrón around the world.”
“Patrón is one of the fastest growing products in the entire spirits industry, and becoming a significant shareholder is a fantastic opportunity for Bacardi,” said Kabalkin.
BACKGROUND. Last year Bacardi launched a lawsuit at Martin Crowley’s estate to stop the payment of nearly $755 million to help underprivileged children in the third world. Crowley’s executors agreed in January 2007 that DeJoria would pay the estate $755 million for Crowley’s remaining 50% shares. The settlement was then blocked by Bacardi, which states in court papers that it had a prior agreement from 2004 with the executors to buy the stake for $175 million.
The industry has speculated for years that Bacardi, among others, may eventually acquire Patron entirely.
PERNOD TO SELL NON-CORE WINE AND VODKA BRANDS
Last week, Pernod announced it will dispose non-strategic brands over the next 12 to 18 months in effort to decrease debt levels after acquiring Vin & Sprit. Sources say that Pernod Ricard will likely divest non-core wine and vodka brands to help pay down debt, according to an article in the Financial Times.
Allegedly, the company’s wine assets are no longer considered strategic. As a result, “important wine assets in Spain and Argentina, inherited from the acquisition of Allied Domecq, are likely to be divested,” industry sources told mergermarket. French analysts slated Bodegas y Bebidas, a Spanish wine company and owner of Campo Viejo, as the most likely wine divesture. The Argentinean company Graffigna, which Pernod also inherited from Allied, is also likely to go. FT cited Constellation Brands as “a logical bidder.”
In terms of spirits, Gronstedts Cognac in Sweden is the biggest disposal planned, sources said. Up for sale is also Dry Anis in Finland, Serkova vodka in Greece, Lubuski gin in Poland and Star Gin and Red Port.
Sources were mixed on whether Pernod would consider selling Chivas, Beefeater or Kahlua, noting all brands have suffered in the current climate but were still considered strategic. Kahlua seemed to be the likeliest divestment out of the three.
NABCA VOLUMES FLAT IN JUNE
Spirits volumes for control states were flat in June, up 2.5% year to date, reports UBS analyst Melissa Earlam. Premium brands were still growing faster than the market, but at a slower pace than prior periods. For example Grey Goose grew 4.3%, Ketel One rose 4.9% and Patron was up 19%.
Diageo’s volumes declined slightly in June, falling -0.2%. The company took share in Canadian whisky (1% versus category 0%) and cocktails (6.6% vs category 1%y/y). It lost volume share in vodka (0.2% vs category 3.4%), rum (-2.5% vs category -1.9%), gin (-3.8% vs category -3%) and Scotch (-5.9% vs category -4.1%). UBS said it believes this is related to 5% price increases introduced in the U.S. over the last months.
Pernod’s volumes declined -6%. It gained share in Irish whiskey (23% vs 18%), and Scotch
(-2.8%). However, it lost share in vodka (-2.5%), gin (-5.5%), rum (-12.4%) and brandy/Cognac (-73% vs category -4%) where it is de-emphasizing VS growth.
Brown Forman volumes declined -2.8% and Remy declined -1.8%. Campari grew 4.1%, driven by strong vodka growth of +5.9%.
UBS rated Pernod and Campari Buy. Diageo and Brown-Forman were rated Neutral. It expects a slowdown in US spirits growth during the recession, but forecasts market volume growth of 1.7% and 4.5% sales for 2008.
FORTUNE BRANDS TO DECLASSIFY BOARD
Fortune Brands board of directors has unanimously approved a plan to declassify the board beginning in 2010. The plan will be subject to shareholder approval at the company's 2009 annual meeting.
The company's directors are currently divided into three classes and are elected to staggered three-year terms. If the plan announced today is approved by shareholders, the company will phase-in annual election of directors beginning at the 2010 annual meeting. As of the 2012 annual meeting, all directors would be elected on an annual basis.
A non-binding shareholder resolution calling for annual election of directors received the support of 54% of the shares outstanding at the company's 2008 annual meeting. The classified board was originally approved by shareholders in 1986.
TROUBLE FOR PAX WINE CELLARS
Pax Mahle has been fired as winemaker from his eponymous label Pax Wine Cellars and replaced by Tyler Thomas, reports Wine Spectator. Meanwhile, Mahle, his wife Pamela Schaab, and Pax’s majority owner, Joe Donelan, are locked in a legal battle over the winery.
Mahle founded the winery in 2000 along with his wife and Connecticut-based investor Donelan, who owns a 55% share. The partners have supposedly disagreed over several winemaking and management decisions, and Mahle expressed a desire for a buyout or outright dissolution of the brand. Donelan rejected a buyout offer and filed a suit against the couple.
Donelan told Wine Spectator that he intends to continue the Pax label. Mahle, meanwhile, is building a winery in Sonoma, where he plans to make a variety of wines.
FORMER PRESIDENT OF JOSEPH PHELPS DIES
We regret to inform you that Tom Shelton, the former president of Joseph Phelps Vineyards, died on Saturday night after a long battle with brain cancer. He was 55.
Shelton joined Phelps in 1992 as vice president of sales and was promoted to president in 1995, a position he held for 13 years. He was also a spokesperson for the Napa Valley Vintners, which worked to protect Napa Valley producers and to develop less restrictive direct-to-consumer shipping laws.
In a statement released Monday, the Shelton family said: "Tom was a wonderful husband, a loving father, and a great friend who will be missed very much. We are all so blessed to be touched and inspired by such a caring and outgoing individual.”
B-F INVESTS $6M IN JACK DANIEL DISTILLERY
Brown-Forman is reportedly set to invest more than $6 million in its Jack Daniel Distillery in Lynchburg, Tennessee to improve efficiency and increase output of 20 million liters a year. In all, the distillery plans to add 9 fermenters to its already 48 fermenters to increase the amount of spirit yielded from each batch of grain. Through cost savings, B-F believes it will recapture the cost of the investment in just a few months.
WSD BRIEFS:
PERNOD RICARD USA has appointed Thomas G. Krekeler, a veteran beverage alcohol Operations executive, as Plant Manager at the Wild Turkey Distillery in Lawrenceburg, KY. Krekeler will join Pernod on August 18, 2008, reporting to Dan Denisoff, senior vp, operations.
THE LOUISIANA STATE LEGISLATURE has named the Sazerac the official cocktail of New Orleans during their recent legislative session. The drink contains Sazerac Straight Rye Whiskey, Herbsaint and Peychaud's Bitters.
Until tomorrow, Megan
“Be thou the first true merit to befriend, his praise is lost who stays till all commend.”
Alexander Pope
--------- Sell Day Calendar ----------
Today’s Sell Day: 20
Sell days this month: 23
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Tues.
YTD sell days Over/Under: +0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 2:22 PM
<< Home