MANILA, Philippines – British liquor giant Diageo is buying Don Papa Rum of the Philippines for 260 million euros ($280 million) upfront.

Diageo, listed on the London Stock Exchange, noted that the acquisition price could go up an extra 177.5 million euros ($191.7 million) through to 2028, subject to the brand’s performance.

The acquisition is expected to close in the first half of 2023 and will be funded through existing cash reserves.

Diageo has over 200 brands in its portfolio, including Johnnie Walker and Baileys. But it has only one rum brand – Captain Morgan.

The British company said the “super-premium plus segment” of the rum category is in the early stages of “premiumization,” or where customers are willing to pay more for a product. The segment had a compound annual growth rate (CAGR) of 18% in Europe and 27% in the United States between 2016 and 2021. 

“Through the same period, Don Papa Rum consistently outperformed the market in Europe, delivering a 29% CAGR,” Diageo said.

“We are excited by the opportunity to bring Don Papa into the Diageo portfolio to complement our existing rums. This acquisition is in line with our strategy to acquire high-growth brands with attractive margins that support premiumization, and enables us to participate in the fast-growing super-premium plus segment,” added Diageo president for Europe and India John Kennedy.

Don Papa Rum was launched in 2012 and was founded by entrepreneur Stephen Carroll, together with Andrew John Garcia.

The high-end rum is aged in American oak barrels in Negros Occidental. Its rich texture and taste is due to the Philippines’ tropical climate and local sugarcane.

Don Papa Rum is currently sold in 30 countries, with France, Germany, and Italy being its largest markets.

Carroll will remain in the company and work alongside Diageo.

“They believe in our unique story and have genuinely embraced our brand idea. We believe this acquisition is a great opportunity to take Don Papa into the next exciting chapter of its development,” Carroll said. – Rappler.com

$1 = 1.08 euros