Diageo nears deal to offload Bushmills

Diageo is nearing a deal with Jose Cuervo that would give the British liquor company full ownership of Don Julio tequila in exchange for its Bushmills Irish whiskey label, the Wall Street Journal reported over the weekend.

The two sides are in advanced talks for a deal that would hand Diageo the 50% of Don Julio that it does not already own as well as a cash payment, the report stated. In return, it would hand over Bushmills to Cuervo, the paper said.

Exact terms of the expected agreement, which could be announced as soon as next week, could not be learned, it said.

A spokesman for Jose Cuervo declined to comment to Reuters. A Diageo spokeswoman also declined to comment.

The deal would enable Diageo, the world’s biggest maker of spirits, to boost its presence in the high-end tequila segment after its efforts to buy Jose Cuervo outright fell apart nearly two years ago, the Wall Street Journal said.

Jose Cuervo, owned by the Beckmann family of Mexico, and Diageo long-held a distribution pact that terminated last year.

Don Julio is an upscale portfolio of tequilas that currently enjoys sales increases of about 25% per year, outstripping the growth of Jose Cuervo, the world’s biggest tequila brand, the paper said.

In its last financial year, Diageo’s Irish brands performed strongly and Bushmills grew its global sales by 7%, with Russia, Germany and eastern Europe showing particularly strong growth momentum for the brand.

Reuters (additional reporting by Irish Examiner staff).