The world's largest liquor maker will pay up to $610M for Ryan Reynolds' gin
Sounds like a European EDM DJ... Actually the world's largest liquor maker. Diageo is the liquor legend behind cabinet classics like Don Julio, Baileys, and Smirnoff. Its 200+ alcohol brands are sold in 180 of the world's 195 countries (#flex). Its annual report looks like a lifestyle mag (Johnnie Walker-filled mason jars abound). Soon, it'll get some Deadpool cocktails:
- Aviation Gin: Ryan Reynolds bought an ownership stake in the gin brand in 2018. Since then, he's appeared in commercials that look more like Terrence Malick films (feat. citrus fruits misted with Ryan's tears).
- $610M: How much Diageo could pay to buy Aviation, along with its producer Davos Brands.
Big faces = big money... Aviation won't be Diageo's 1st celeb-backed brand. In 2007, Diageo teamed up with P. Diddy to sell Ciroc vodka. In 2017, it dropped $700M+ for George Clooney's Casamigos tequila.
- Diageo wants to lock in more celeb-infused growth now that bar sales are down. Ryan Reynolds could be its next Green Lantern.
- Aviation's sales doubled from 2018 to 2019, coming in at $40M. In 2019, it accounted for 40% of growth in the super-premium gin segment.
Celebs come with built-in brand equity... Brand equity = the extra value companies can squeeze from customers thanks to perception of their brand. Diageo’s OG portfolio = stuffy old liquor brands that don’t excite us. Diageo can win younger drinkers with Ryan's Millennial-friendly face (and charge extra). Its big investment will save it years (and millions) trying to make a new brand pop off. FYI, cosmetics giant Coty used the same strategy by acquiring Kylie Cosmetics.