British liquor firm to acquire PH rum brand Don Papa

The British beverage firm that owns the Johnnie Walker brand has agreed to acquire Philippine rum brand Don Papa, a move that will see it obtaining a major stake in the southeast Asian country’s alcoholic drinks industry.

Diageo, whose brands also include Tanqueray gin, Smirnoff and Baileys, said the upfront consideration for the acquisition of the super-premium dark rum brand is €260 million, with further potential consideration of up to €177.5 million through to 2028.

The British firm -which is a listed on the London and New York stock exchanges- said the consideration is subject to performance, adding that it reflects the Don Papa brand’s growth potential.

Diageo said the super-premium plus segment of the rum category is in the early stages of premiumization, with a compound annual growth rate (CAGR) of 18 percent in Europe and 27 percent in the United States between 2016 to 2021.

It said Don Papa Rum has consistently outperformed the market in Europe, delivering a 29-percent CAGR.

Diageo said the acquisition will be funded through existing cash reserves and is expected to close in the first half this year, with more information about the transaction becoming available after the release of the company’s 2023 fiscal interim results on Jan 26.

“We are excited by the opportunity to bring Don Papa into the Diageo portfolio to complement our existing rums. This acquisition is in line with our strategy to acquire high growth brands with attractive margins that support premiumization, and enables us to participate in the fast growing super-premium plus segment,” said Diageo president for Europe and India John Kennedy in a statement posted on the company website.

For his part, Don Papa Rum founder Stephen Carroll said the British beverage giant has a strong track record in nurturing founder-led brands.

“They believe in our unique story and have genuinely embraced our brand idea. We believe this acquisition is a great opportunity to take Don Papa into the next exciting chapter of its development,” said the Don Papa executive.

Carroll will remain involved with the Don Papa brand, working alongside Diageo to build on its growth potential.

The Don Papa Rum brand was launched in the Philippines back in 2012 by Carroll and fellow entrepreneur Andrew John Garcia.

It is currently available in 30 countries, with its largest market being France, Germany and Italy.