Diageo, the huge London based distillery consortium has agreed to buy the Brazilian Cachaca brand Ypioca for a reported $453 million. Ypioca Agroindustrial Limitata is the second largest brand and third largest by volume produces an annual sales of approximately $90 Million in 2011. Brazil is the real interest for Diageo, who is looking for faster growing emerging markets. "Brazil is an attractive fast-growing market for Diageo with favorable demographics and increasing disposable income," according to Diageo chief executive officer Paul Walsh. The transaction is expected to be completed in about a month. Diageo is also the owner of such brands as Smirnoff, Johnnie Walker, Captain Morgan, Zacapa, and many more in the spirit world.
Cachaca is the primary ingredient in "Caipirinhas" a cocktail that is a combination of cachaca, lime, sugar and ice. Cachaca is fermented from sugar cane crushings, fermented and then distilled. There are two types of Cachaca, unaged (white) and aged (gold). The white is bottled straight off of the still and us usually a much harsher version and the most prevalent. There are some of the white cachaca that are aged in wooden barrels for up to 12 months and then filtered back to the white color. The aged or gold cachaca is usually rested in wooden barrels for up to 15 years in the case of the ultra-premium cachacas. Like so many other cane spirits, aged cachaca is used in premium cocktails rather than the harsh white.
This is an important step for Diageo because it can only grow it's sales by expansion into emerging markets where there are few economic conditions that are going to hold back the sales. Diageo is looking for at least 50% of it's sales from emerging markets. ;o)
