It is ironic that almost a century ago, alcohol was illegal — this might not seem realistic today given that this industry contributes on average, $475 billion a year to the U.S. economy. Celebrities like Sean “P Diddy” Combs either have partial ownership in an alcohol brand like Ciroc, or have their own liquor brand entirely. Perfect examples of celebrity liquors are Kenny Chesney’s Blue Chair Bay Rum or the vodka brand owned by Mr. Worldwide himself, Voli Vodka.   
 
Yet, beginning in 1920, The 18th Amendment prohibited “the manufacture, transportation and sale of intoxicating liquors” and although thought of by the Temperance movement as a good idea, prohibition hurt more than it benefited the economy. Thousands employed by the alcohol industry were out of a job, other industries like restaurants suffered due to low sales, and  consumption of tainted alcohol — not filtered or distilled safely– resulted in nearly 1,000 deaths per year. With the 21st Amendment passed in 1933, the Prohibition era came to an end.
 
Similar to many other industries, the alcohol industry has experienced acquisitions, with large conglomerates owning several brands of alcohol. The best known alcohol conglomerate is the London-based Diageo, which owns brands like Guinness, Smirnoff, Johnnie Walker, Hennessy, and most recently acquiring George Clooney’s tequila brand Casamigos.
 

an imge of diageo brands

Diageo Brands B.V. (indiancaselaws)

Another powerhouse in the alcohol industry is Bacardi. Under the Bacardi umbrella are over 200 brands such as Martini & Rossi, Dewar’s Scotch Whiskey, and Grey Goose.  In 2008, Bacardi purchased a minority stake in the ultra-premium tequila brand, Patron, to diversify their brand umbrella and move into the luxury tequila market. Although purchased by St. Maarten’s Spirits in 1989 and moved to a new distilling facility in 2002, the “premium” tequila brand touted by The King of Crunk Lil Jon and numerous country artists, announced that Bacardi will be purchasing Patron for an estimated $5.1 billion.  “Adding Patron to the Bacardi portfolio creates a tremendous opportunity for the brand outside of the United States.” said Mahesh Madhavan, CEO of Bacardi.
 
According to The Distilled Spirits Council, tequila volumes have increased by six percent every year since 2002 — this could very well mean that the acquisition of Patron will more than likely pay off greatly.
 
With the $5.1 billion acquisition of Patron, Bacardi is now the unofficial king of “super-premium” liquor and an incredibly close second to the aforementioned Diageo. It will be good to see how the brands interact and compete against each other. Diageo owns Captain Morgan and therefore, the have an advantage in my book.
 

How do you feel about this acquisition? Tell me on Twitter at @CaptainKasoff.