Diageo Digs Into Growing Premiumization Trend With 21Seeds Acquisition
Tequila/mezcal sales grew 30% to $5.2 billion in the U.S. in 2021, according to the Distilled Spirits Council of the United States, making it one of the fastest-growing spirits category by revenue. The overall U.S. distilled spirits sector recorded strong growth thanks to restaurants re-opening and consumers flocking toward super-premium spirits at home.
In announcing the acquisition, Diageo also cited research from IWSR that found the flavored tequila segment grew more than 20% from 2019 to 2020, with super-premium flavored tequila increasing 65%.
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Co-founder Kat Hantas said the brand was started because they wanted to develop a casual drink that made tequila cocktails as approachable as a glass of wine or beer. Hantas, along with co-founders Nicole Emanuel and Sarika Singh, will continue to actively work on 21Seeds, collaborating with the Diageo North America team.
“It’s been a thrill to watch consumers embrace our brand, and we are excited about the future for 21Seeds with Diageo’s resources and capabilities behind it,” she said in a statement.
Terms of the cash deal weren’t disclosed.
Diageo, the No. 39 consumer goods company, also offloaded its Windsor whisky business to a South Korean private equity firm this week for about $162.9 million. Under terms of the deal, Diageo will supply Scotch whisky to the Bayside and Metis private equity consortium for 10 years.
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Sam Fischer, Diageo president of Asia Pacific and global travel for Diageo, said the deal marks the next chapter for Diageo Korea, noting the company remains committed to the market and further developing its international spirits and beer business.
That business, she noted, is being driven by premiumization and consumer interest in categories like international whisky.
“We take a disciplined approach to capital allocation,” added Fischer, “and this sale is very much in line with our track-record of active portfolio management.”
The deal is expected to close in fiscal 2023.