We all know George Clooney the gorgeous Hollywood star. You may also know of the tequila brand he begun in 2013 with friends Mike Meldan and Rande Gerber. What you may not know is that the business that is barely five years old has been sold for a whopping $1 billion in a recent deal. The initial $700 million will be paid in cash upfront whereas the remaining $300 million will be paid within the next 10 years if the buyer hits the undisclosed sales target. The tequila brand called Casamigos was sold to Diageo, a British beverage company, on Wednesday 21st June 2017. The transaction is expected to close in the second half of 2017.
When translated, Casamigos means house of friends.’ The establishment begun as a tequila collection meant for close friends of Clooney and Gerber. The aim was to make the smoothest and best tasting tequila for consumption by friends and family members. In 2013, the label was brought to the public and licensed as Meldan joined in the partnership. Gerber says that the label has since grown immensely and is now among the fastest growing ultra premium tequila brands. He remembers how he and Clooney would spend many nights conducting research on tequila at their Casamigos vacation in Baja Peninsula, Mexico. The founders are all successful in their different careers. George Clooney is an award winning actor; Gerber is the founder of Midnight Oil (a night club) and the Gerber Group while Meldan is a tycoon in the real estate sector. Casamigos has been doing great having sold over 120,000 cases in 2016 and is expected to sell over 170,000 cases in 2017.
Diageo is among the world leaders in brewing business. It was actually the world’s largest distiller until 9th April 2017. The company that has been around since 1997 sells in over 180 countries and has offices in over 80 countries. It really is a giant in the alcohol sector.
Statement sent to newsrooms by Clooney said that the transaction showed the belief of the two companies in each other. He also said that they (Casamigos) founders would not be going anywhere. They will still remain a part of Casamigos and joked that a proof of this would be a shot or two of the tequila on the night the deal was sealed.
According to data by IWSR, a research firm, tequila is the best selling hard liquor category. The sales improved by 7.4 percent in 2016. The upscale brands have the highest growths with 292% rise from 2002 to 2016 for high end tequila and super premium brands having an increase of 706% (the likes of Casamigos) during the same period of time. It is for this reason why Diageo seemed very eager to add Casamigos to their list of brands. The CEO, Ivan Menezes, said that the company aims at focussing on the growth of super premium brands. They will be using their global reach to try and take the Casamigos tequila beyond the American market. This is despite Diageo owning the Don Julio brand which is another super premium tequila brand that is doing quite well.
Critics say that the price that Diageo paid for the Casamigos brand may be exaggerated. The price is over 20 times the brand’s annual sales! Diageo however believes that this brand will be able to bring more than what was paid for it. The major brewer does not expect the brand to have any impact on their earnings until three years from now. How will Casamigos do? This remains to be seen in years to come.
George Clooney is not the first Hollywood star to get into business. Others include Leonardo DiCaprio and Kevin Spacey who have invested in Casper and Justin Bieber who has invested in Spotify. Clooney however is among the first stars to venture into a start up business and make so much money out of it.
Having welcomed twins with his wife Amal earlier this month, this seems to be the best year for the new dad. Though it is not yet clear how much he will be taking home it is likely to be a large chunk and it will go a long way in making the actor richer. He now plans to keep making movies among which is the Ocean’s Eight slated for release in 2018. He will still be involved in Casamigos Tequila. We can see similar trends in 2017 within the toys (see: Vtech Australia) & digital marketing industry.