The transaction with Ypioca Agroindustria was valued at 900M Brazilian Real (BRL), which is about £300M in cash, and is expected to complete in a month. It expands Diageo’s presence in Brazil and enhances access to the growing number of middle class consumers who are driving the growth of premium brands.
The Ypioca brand has net sales of BRL 177M (about £60M) based on the adjusted figures for December 2011.
Cachaca is the largest spirits category in Brazil and Ypica is the leader in the growing premium cachaca segment. It is the second by value and the third by volume in the overall cachaca category. In addition, Ypioca has an extensive sales and distribution network in the Northeast of Brazil and the second largest retail penetration nationwide.
Paul Walsh, ceo of Diageo said: “Brazil is an attractive, fast-growing market for Diageo with favourable demographics and increasing disposable incomes. The acquisition of Ypica gives us the leading premium brand in the largest local spirits category.
“It will also provide Diageo with an enhanced platform from which to accelerate the long-term growth of our premium international spirits brands in Brazil.
“This investment represents the continuation of our strategy to increase Diageo’s presence in the fastest growing economies of the world.”