A big whiskey acquisition is a shot in the arm for the global spirits industry, but there may not be many more substantial liquor deals to strike.
By agreeing to acquire Jim Beam for $13.6 billion Monday, Suntory, a privately held Japanese food and beverage producer, snatched up one of the most attractive targets left on the market and will assume the mantle of the third-largest distiller globally.
With brands including Maker’s Mark and Jim Beam bourbon, Beam had been riding high.
“It’s a good deal for Beam shareholders,” said John Faucher, JPMorgan analyst. “Looking at the rapid growth we’ve seen in bourbon over the recent years, Beam is doing a good job seizing the moment, striking while the iron is hot.”
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But Beam is a company at least two others would have liked to own. Diageo, the largest distiller in the world, explored a bid for Beam in 2012. An offer was never made, however, and analysts believe it would have been difficult to get the approval of antitrust regulators.
The consensus among industry watches is that Diageo, with brands including Johnnie Walker, Crown Royal, Smirnoff and Tanqueray, will be hard pressed to add many more premium brands in the United States, the world’s largest liquor market.
Pernod Ricard, the second-largest global distiller, was another potential acquirer of Beam. With brands including Chivas Regal, Jameson and Absolut, buying Beam would have given the company additional market share in the United States.
But Pernod is constrained for its own reasons. Controlled by a French family, it is seen as lacking the balance sheet or the maneuverability to pay a premium for Beam that could match what Suntory offered.
And it was only in 2008 that Pernod bought Sweden’s Vin & Sprit, maker of Absolut, for $8.9 billion.
After Suntory, which will become the third-largest distiller, is Brown-Forman, a public group that owns brands including Jack Daniel’s and Southern Comfort.
With a market capitalization of $16.7 billion, Brown-Forman lacked the scale to snare Beam.
This ranking — Diageo, Pernod, Suntory and Brown-Forman — could be the status quo for some time. “Those four big players are unlikely to be purchased themselves,” said Jeremy Edwards, lead analyst at IBIS, a research firm.
Instead, the most attractive targets could be two smaller groups.
Campari, a private, family controlled group, owns Skyy Vodka and Wild Turkey, in addition to its marquee brand. And Bacardi, another private group, owns Dewar’s, Grey Goose and Bombay Sapphire.
“Bacardi especially could be targeted in the future,” Edwards said.