Diageo has agreed to purchase Don Papa for €260 million
Diageo, the company that makes Captain Morgan, has agreed to buy Don Papa, a brand of rum from the Philippines, for an initial price of 260 million euros (281.5 million dollars).
As part of the agreement, Diageo would also be responsible for making performance-based payments of up to €177.5 million (US$192.2 million) through 2028.
According to research from IWSR that Diageo quoted, the market for super-premium plus rum rose at a compound annual growth rate (CAGR) of 18% between 2016 and 2021 in Europe, and at a rate of 27% in the United States.
With a compound annual growth rate of 29% throughout the course of the evaluation period, Don Papa beat the market in Europe.
Diageo’s portfolio of rums includes the spiced rum Captain Morgan, the brand of rum from Guatemala known as Ron Zacapa, and the brand of rum from Cuba known as Ron Santiago de Cuba, which Diageo sells outside of Cuba.
In August of 2017, the business incubator Pronghorn, which is sponsored by the alcohol company Diageo, made its first investment in the Caribbean rum brand Ten to One, which is co-owned by the American singer Ciara.
“We are pleased by the chance to add Don Papa to the Diageo portfolio to complement our current rums,” said John Kennedy, head of Diageo Europe and India. “Don Papa is a world-renowned rum brand.”
This purchase fits with our goal of buying fast-growing brands with good margins that support premiumization. It also lets us join the fast-growing super-premium-plus market segment.
Don Papa Rum, which was initially released in 2012 and is now sold in thirty different countries, was created by businessman Stephen Carroll and Andrew John Garcia. The brand is most successful in the markets of France, Germany, and Italy.
On the island of Negros Occidental, sometimes referred to as “Sugarlandia,” the rum is distilled and then matured in oak barrels made in the United States. The rum has hints of vanilla, honey, and candied fruits in its flavor profile.
Carroll, who will continue to work with the company and with Diageo, stated that “Diageo has a solid track record in developing founder-led companies.” Carroll will continue to work with the brand. They are true believers in our one-of-a-kind narrative and have wholeheartedly embraced our overall brand concept.
We feel that this acquisition presents a fantastic chance for Don Papa to enter the next exciting chapter in the course of its development.
The purchase will be completed in the first half of 2023 and will be financed using the available cash reserves at the time of the transaction.
Following the publication of its financial statements for the fiscal year 2023 on January 26th, the firm stated that it will be able to provide further information on the transaction.