Gruppo Campari announced Thursday that it has acquired Brazilian brand Sagatiba, market leader in the increasingly attractive market of premium cachaça in Brazil. Gruppo Campari had started selling Sagatiba in Latin America under a distribution agreement in March 2010.

Gruppo Campari acquired 100% of the share capital of Sagatiba Brasil S.A., directly and indirectly controlled by the entrepreneur Marcos de Moraes. The acquired business includes the Sagatiba trademarks and the related business assets, including finished goods.

The acquisition price is US$26 million (equivalent to € 18 million on the acquisition date), plus the payment of an earn-out calculated as 7.5% of annual sales value posted in the 8 years period after the deal’s closing.

The implied EBITDA multiple in 2012 (the first year of full consolidation of the brand’s profitability) based on the overall acquisition price of US$36.3 million (inclusive of the expected earn-out) is 13 times, noted the release.

With the acquisition of Sagatiba, the Group aims to exploit the growing premium cachaça category in Brazil driven by the consistent trading up of local consumers towards premium brands, thanks to higher disposable income and positive demographics.

The Group adds a high-quality business with relevant upside potential in the attractive Brazilian market and further enhances the Group’s local offering in terms of category (covering aperitifs, cachaça, vodka, local whiskies, liqueurs and local brandy) and price points.
 
Gruppo Campari enjoys a well established position in Brazil, with a strong leadership in the aperitif segment with internationally renowned brands like Campari (of which Brazil is one of the largest markets), Cynar and Cinzano.
 
Moreover, the local offering includes strongly growing SKYY Vodka as well as nationally recognized brands, like the leading aguardiente Dreher and the admix whiskies Old Eight and Drury´s.

Founded by Brazilian entrepreneur Marcos de Moraes in 2004, Sagatiba’s portfolio offers consumers a variety of high quality cachaça, including an unaged offering (Pura), primarily marketed towards a younger demographic and positioned for mixed drinks, and an aged portfolio (Velha and Preciosa), targeted towards an older demographic who would consume aged cachaça ‘straight’.

Cachaça is the most important spirit category in Brazil. It is derived from sugarcane and is the key ingredient in the classic ‘caipirinha’, Brazil's famed lime and sugar drink. Global sales of cachaça exceeded 85 million nine-litre cases on a worldwide basis in 2010. Brazil represents 99% of the global sales.

This growth is driven by the trading up of local consumers moving from standard spirits into premium brands.

4th August 2011