Remy Cointreau (REMYF) , the French spirit maker, has made good on its promise to focus on the premium spirits market with the purchase of Westland Distillery, just in time for the holiday drinking season.
Westland, a boutique distillery based in Seattle, makes American single malt whiskeys that sell for between $70 to $125 a bottle. The group has three malts and is referred to as a "vanguard in the growing American whiskey movement". Drinks makers are pushing into premium brands as consumers' taste change and drinkers become more discerning and Washington state has seen a boom in small distilleries due to favorable weather for growing barley.
The deal is expected to close by the end of the year, terms were not disclosed.
Remy Cointreau stock fell 1.7% by 10:00 Paris time to €77.64 each, but have gained around 20% since the start of the year.
Remy Cointreau has previously said that it will focus on the high-end drinks market and analysts at Barclays have applauded the company's strategy of focusing on spirits priced $50 a battle and more. Sales in the category have grown by 16%.
The drinks maker reported in November a 15% increase in first-half profit on gains in China and the U.S., beating analysts' expectations.
First-half net profit rose to €76 million ($80.3 million), while operating profit climbed 15.9% to €123.9 million on the back of a strong performance by the group's Rémy Martin, Cointreau, Metaxa and Islay Spirits brands.
"Remy is well-placed to benefit from the global premiumization trend in spirits. China may be turning the corner at last," noted Liberum analysts when its results were released last week.
High-end spirits have become an area of focus for many distillery groups.
In October, Constellation Brands STZ announced it had acquired craft whiskey maker High West Distillery for about $160 million. The Utah-based small batch distiller sells about 70,000 nine-liter cases a year and is known among aficionados for its high-price bottles. It is best known for its Bourye, a limited edition blend of bourbon and rye, that sells for $75 a bottle.
Constellation, whose brands include Svedka Vodka, Black Velvet Canadian whisky and Casa Noble Tequila, has also been focusing on premium alcohol products and has done three such deals in the past year. It is reported that Constellation beat out Pernod Ricard (PDRDY) and LVMH (LVMUY) for the deal.
A good move for the company who sees the bulk of its revenues come from its Mexican beer brands Corona Extra and Modelo. The company could be hard hit if trade between Mexico and the U.S. sour under President Trump.