Emperador acquires world’s biggest maker of premium spirits

MANILA, Philippines - Emperador Inc., the hard liquor unit of property tycoon Andrew Tan, is making its largest acquisition to date, taking over the spirits business of the world’s biggest premium drinks group.

The $724.24-million takeover of Whyte & Mackay, which jumpstarts the expansion of Emperador into the spirits business, was approved by the board of directors of United Spirits Ltd.

“The sale is subject to United Spirits shareholders’ approval as well as the Indian and UK regulatory requirements and is pursuant to a commitment goven to the UK Competition and Markets Authority,” said United Spirits, a unit of Diageo Plc.

“Whisky is the second fastest growing spirits segment in the world next to brandy. With this acquisition, Emperador will be exposed to two of the fastest growing spirits segments in the world,” said Emperador chairman Tan.

Tan said the strong global demand for Scotch whisky is expected to continue moving forward.

“We believe that White & Mackay is a prized asset with excellent growth opportunity and its acquisition is in line with our plans to enhance our product portfolio,” Tan said, adding that White & Mackay has a distribution network in 50 countries.

For his part, United Spirits chairman Vijay Mallya said the company welcomed the deal given that the new owner who will realize the full potential of White & Mackay.

Diageo partnered with Emperador in March to bring world famous alcoholic beverages to the Philippines. The new alcohol brands are targeted towards the growing middle class population in the country.

Diageo produces a wide collection of premium spirits, beer and wine. Among these brands include Johnnie Walker, Smirnoff, Captain Morgan and Guinness, which are sold in more than 180 countries. Emperedor is the company behind Emperador, Generoso and Emperador Light brandies and a line of flavored alcoholic beverages called The Bar.

In 2012, EDI bought the Biñan, Laguna production facility from the Philippine unit of Diageo. With the new facility, Emperador targets to increase its production and technical capabilities as it promotes Emperador as a global brand.

Emperador targets to double its earnings to P11.6 billion by 2016 or 2017 from P5.8 billion last year, supported by the planned expansion domestically and globally.

“The expansion is in line with Emperador’s strategy of diversifying and strengthening its liquor product portfolio as well as its premiumization strategy in the liquor industry,” the listed company said.

The company has budgeted P4 billion for the expansion of its local bottling facility, which is currently running at 75-percent capacity. Emperador’s goal is to double its sales in the next four years to account a third of the global brandy market.

The liquor firm also invested a total of P5.8 billion in vineyards, distilleries and bodegas in Spain with the acquisition of Bodega San Bruno S.A. It now owns about 1,000 hectares of land, which the company plans to build into vineyards to support its brandy production in Spain.

Emperador is part of Tan’s Alliance Global Group Inc., which is also into property (Megaworld Group), fastfood (McDonald’s franchise operator Golden Arches Development Corp.) and hotels and casino (Travellers International Hotel Group Inc.).