Brown‑Forman has made its first foray into rum, reaching an agreement to purchase the Diplomático Rum brand from Destillers United Group.
Brown‑Forman will add the Diplomático Rum family of brands to its portfolio and acquire a production facility located in Panama.
It’s acquisition season in the drinks world, with the deal following Diageo buying Mr Black coffee liqueur and Asahi purchasing StrangeLove.
The Diplomático Rum family of brands is the No. 1 super- and ultra-premium rum and the No. 2 super-premium+ rum worldwide (IWSR, 2021). Super-premium+ rum has grown at an annual rate of 17% over the past five years, with rum accounting for approximately 8% of global spirits.
“Diplomático Rum will join our expanding portfolio, giving Brown‑Forman a market leading entry into the fast-growing super-premium rum category,” said Lawson Whiting, President and CEO, Brown‑Forman Corporation.
“This aged rum brand has distinctive packaging, strong brand positioning, and is a delicious tasting spirit,” “As part of this acquisition, we will welcome more than 100 new employees to Brown‑Forman.”
Destillers United Group will continue to produce and age Diplomático Rum in their original distillery at the foot of the Andes mountains.
“We are proud to have pioneered and been instrumental in developing the super-premium+ rum category around the world. Diplomático Rum is ready to accelerate its growth with Brown‑Forman, one of the world’s most well-known spirits and wines companies,” stated Destillers United Group.
“We share a similar familial culture and know the brand will continue building on our legacy. We look forward to working together to bring Diplomático Rum to consumers around the world.”
Diplomático is sold in more than 100 countries. It consists of three ranges of complex rums. The Traditional Range includes Planas, Mantuano, Reserva Exclusiva, and Selección de Familia. The Prestige Range includes Single Vintage and Diplomático Ambassador, both aged 12 years and finished in Spanish sherry casks. The Distillery Collection includes a range of three limited production bottlings that showcase the distillery’s unique distillation methods.
The transaction, which is subject to customary closing conditions, is expected to close within 90 days.
Why Brown-Forman invested in premium rum
According to IWSR, Brown-Forman’s move last week to acquire Venezuelan rum brand Diplomático from Spain’s Destillers United Group caps a period of strong growth for the high-end rum category.
Its data shows global premium-and-above rum volumes rose by a compound annual growth rate (CAGR) of +8% between 2014 and 2019, with value up by a CAGR of +9% over the same period.
After a strong post-COVID-19 recovery in 2021, premium-plus rum volumes are expected to climb by a CAGR of +6% between 2021 and 2026, with value increasing by a CAGR of +6.5%, the IWSR forecasts.
Consumption is heavily concentrated in the US, but the category is also performing well in a number of other countries, including European markets (France, UK, Germany, Italy, Spain and Belgium/Luxembourg), Canada and Australia.
Growth is being fuelled by the continued spread of cocktail culture, but also by a change of image for rum, which is increasingly being taken seriously as a high-quality spirit to rank alongside Cognac and single malt Scotch whisky.
“The change in perception of rum from a spirit that is drunk mixed to one that can be sipped continues,” says Jose Luis Hermoso, Research Director, IWSR. “Premium-and-above rum is therefore growing at the expense of lower qualities.”