Diageo acquired US single malt whiskey producer Balcones Distilling for an undisclosed amount.
The deal – announced today (2 November) and funded from the London-based company’s existing cash resources – is Diageo’s first large-scale acquisition in the US single malt category. Diageo too has a minority investment in Westward Whiskey through its Distill Ventures accelerator.
Texas-based Balcones Distilling – which has a portfolio of “super premium and superior” whiskeys – will join Kentucky Bourbon brand Bulleit in Diageo’s list of American whiskeys.
Balcones Distilling sold 15,000 nine-liter cases in 2021 and is available nationwide in the United States, as well as in 11 international markets, including the United Kingdom. Its products include Lineage American Single Malt and Baby Blue Corn Whiskey.
Diageo North America President Claudia Schubert described Balcones Distilling as “true innovators and pioneers in the emerging American single malt and Texan whisk(e)y” movements.
“This acquisition is in line with our strategy of acquiring high-growth brands in fast-growing segments, such as super premium whisk(e)y, and we look forward to working with the Balcones team to support growth. of these global brands. classy whiskies,” she added.
Balcones Distilling President, Greg Allen, said: “We couldn’t be more proud to have created these award-winning American Single Malt and Texas whiskeys, but also to have helped usher in an exciting new era of whisk(e)y. in Texas. We are delighted that Diageo shares our belief in its potential and we look forward to seeing Diageo bring Balcones’ incredible whiskeys to more consumers. »
American whiskey is in poor health and sales are boosted by interest in premium and superior expressions. According to GlobalData, the category will reach a value of $19.78 billion this year, beating its pre-pandemic high of $18.59 billion. The category’s ten-year compound annual growth rate between 2017 and 2026 is expected to be 4.3%.
In September, the American Alcohol and Tobacco Tax and Trade Bureau (TTB) closed a consultation on proposals to standardize the definition of American single malt. The federal legislation has yet to be unveiled.
Under the proposal definition, the American single malt must be produced entirely in the United States, from brewing to aging. The fermented mash must be 100% malted barley.
An American single malt must also be stored in oak barrels no larger than 700 liters and have a distillation of 80% abv or less. The finished liquid must be bottled at a minimum of 40% abv. The proposal allows the addition of flavorings and colorings, as well as mixing, but neutral alcohol should not be used.