Weighing the Price of Distillery Buyouts

It’s a mean-spirited epithet hurled at 1960s musicians who lend their music to luxury car commercials, art photographers who shoot weddings on the weekend, and craft distillers purchased by big spirits conglomerates: “sellout!” The flurry of small distiller buyouts has certainly caused consternation among some craft whiskey drinkers, but the acquisitions can bring big benefits, according to those who make the deals.

Emotions and loyalties run deep when it comes to what we eat and drink, says Tim Halloran, author of Romancing the Brand. Like discovering a band before it gets famous, drinking relatively unknown whiskies feels special and personal, explains Halloran. Longtime fans often fear that acquisitions will destroy that uniqueness. That feeling is often justified. “There’s a lot of examples of companies that have done a very poor job of taking over,” Halloran says. “But if the consumer can be reassured that the product is still going to be the special brand they know and love, then that’s important.”

Pernod Ricard, which acquired West Virginia-based Smooth Ambler Spirits in late 2016, has a simple formula for preserving a venture’s original ethos: keep the founders. “The worst thing that we could possibly do is exit the founder and the person who created the business that the entire story is built on,” says Jeff Agdern, Pernod Ricard USA’s senior vice president of new brand ventures. “Then what do you have left? You have a product without a soul.” Smooth Ambler co-founder, head distiller, and now CEO John Little emphasizes that the deal—which will triple capacity and help secure new whiskey for the distillery’s sourced Old Scout line—is mutually beneficial. “Some things had to change, and those things were going to change with or without a partnership,” he says. “I understand why people are always nervous about a business so-called ‘selling out,’ but this partnership will enable us to make better whiskey and to make it available to more people.”

Matt Hofmann, master distiller at Westland Distillery in Seattle, evaluated Rémy Cointreau’s history with the Bruichladdich Distillery on Islay before partnering with the French company. “Rémy Cointreau has an outstanding reputation and it’s proven by what they’ve done with Bruichladdich,” Hofmann says. “They purchased them in 2012, they kept everybody on, they expanded production, and Bruichladdich is still doing the amazing things they were doing before.” Westland’s vision—exploring Washington’s terroir and regionality by experimenting with local barley, local oak, and even local peat—will carry on and grow. “Any attempt to alter that would be devaluing the business that they just bought,” Hofmann says.

No distillery will remain unchanged by an acquisition. Bruichladdich founder Mark Reynier—who voted against Rémy Cointreau’s acquisition, left the company, and now runs the new Waterford Distillery in Ireland—fears that corporate ownership can dull any distillery’s unique character. “People say to me that Bruichladdich is not the same as it was, that the excitement isn’t there,” he says. “It needs to be a simpler product offering and of course the nuances just get lost. Quite often the distiller will find that his hands are tied.”  Still, he can’t besmirch Rémy’s good intentions. “Rémy takes a very long-term view. It left a bitter feeling on a personal level, but for Bruichladdich, it couldn’t be in better hands.”

Reynier expects that industry consolidation will make life more difficult for independents, but he’s become more pragmatic. “You’ve got to believe in what you’re doing and do it to the best of your ability, then just see what happens,” he says. The tremendous proliferation of founder-driven distilleries with that ethos, both independent and corporate, ensures that craft whiskey will continue to push the boundaries for years to come.

It’s a Done Deal: Recent Distillery Acquisitions

Woodinville Whiskey Co.—Woodinville, Washington

Sold to Moët Hennessy in 2017

Teeling Whiskey Co.—Dublin, Ireland

Sold minority stake to Bacardi Ltd. in 2017

Bardstown Bourbon Co.—Bardstown, Kentucky

Sold minority stake to Constellation Brands in 2016

BenRiach Distillery Co.—Newbridge, Scotland

Sold to Brown-Forman Corp. in 2016

High West Distillery—Park City/Wanship, Utah

Sold to Constellation Brands in 2016

Nelson’s Green Brier Distillery—Nashville, Tennessee

Sold minority stake to Constellation Brands in 2016

Catoctin Creek—Purcellville, Virginia

Sold minority stake to Constellation Brands in 2016

Smooth Ambler Spirits—Maxwelton, West Virginia

Sold majority stake to Pernod Ricard in 2016

Westland Distillery—Seattle, Washington

Sold to Rémy Cointreau in 2016

Angel’s Envy—Louisville, Kentucky

Sold to Bacardi Ltd. in 2015

Compass Box Whisky Co.—London

Sold minority stake to Bacardi Ltd. in 2014

Forty Creek Distillery—Grimsby, Ontario

Sold to Campari America in 2014

Limestone Branch Distillery—Lebanon, Kentucky

Sold 50-percent stake to Luxco in 2014

Bruichladdich Distillery—Islay, Scotland

Sold to Rémy Cointreau in 2012

Tuthilltown Spirits—Gardiner, New York

Sold Hudson whiskey brand to William Grant & Sons in 2010, followed by the rest of the distillery in 2017

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