Clooney tunes

Have you heard the one about George Clooney’s four-year-old tequila brand selling to Diageo to the tune of $1bn?

It’s hilarious, but it’s no joke – and somehow knowing that doesn’t make it any more believable. The acquisition of Casamigos is one of the most surreal witnessed in the drinks industry in the past decade – it could have been the narrative of a high-end rouse in Clooney’s Ocean’s 11; Diageo the Duped High Roller.

Even for a company with annual revenues of £10bn, it’s impossible to view this $700m-rising-to-$1bn acquisition as a drop in the ocean – Clooney’s or otherwise. There’s the price but also that Diageo went to great lengths to take full ownership of tequila Don Julio and in 2014 acquired high-end tequilas DeLeón and Peligroso. Even against the fast-growing US 100% agave market, it’s well covered. Then there’s Casamigo’s size – it has moving annual sales of 170,000 9-litre cases. Diageo has just made one of its largest acquisitions – a brand the volume of a medium-sized single malt. To think just four years ago Diageo globally distributed Jose Cuervo, a brand 20 times Casamigo’s size.

That’s about when Clooney was first making friends in Mexico. Apparently he, restaurateur Rande Gerber and real estate developer Mike Meldman quite accidently created their $1bn business – it’s easily done. “What started from a friendship and an idea to create the best-tasting, smoothest tequila as our own house tequila to drink and share with friends, has quickly turned into the fastest growing super-premium tequila,” Gerber said.

So how much is the brand really worth? Ignoring the Clooney factor, 170,000 cases is 1.15m 75cl bottles which retail at about $35 a pop. If Diageo took 100% of the sale revenue (which obviously it doesn’t) that’s about $40m a year. Times that by 10? We’re still nowhere close. So when Diageo says it intends to see profit against the outlay after four years, it must have a rapid growth timetable or a very clever pay structure. Probably both.

Is there a precedent to such a big-ticket-small-brand splurge? There was Bacardi’s $2bn acquisition of Grey Goose in 2004, but the vodka was already 10 times the volume of Casamigos. For about £1.1bn Diageo bought a majority share in the entire United Spirits portfolio and divested the White & Mackay family of scotches for less than half that. Forty Creek went to Gruppo Campari for €120m. But more closely connected is Constellation’s purchase of Carlos Santana’s co-owned Casa Noble in 2014. Santana might now be playing the blues after hearing the figures in this latest tequila deal.

Clearly Diageo doesn’t agree with Mark Twain’s advice to “buy land – they don’t make it anymore”. Casamigos is a contract tequila so doesn’t have its own distillery or agave plantations (though Diageo’s $400m investment in Mexican infrastructure in 2015 could lend a hand). But this deal is about brand, not land. And that brand is George Clooney. It has bought a slice of one of the most marketable men on earth.

What with his acting, directing and existing sponsorship roles (he is the face of Nespresso), there can’t be much of him left. But let’s say he does what Diageo hopes, aka sells it like Sean does Cîroc. What does Clooney do with all this easy-earned money? On signing his $40m Nespresso deal in 2013 he said this: “Most of the money I make on the [Nespresso] commercials I spend keeping a satellite over the border of North and South Sudan to keep an eye on Omar al-Bashir [the Sudanese dictator charged with war crimes].”

So while the feeling lingers that it should be Mexico not Hollywood that benefits from tequila, Clooney’s philanthropic tendencies make this a little easier to stomach – if no easier to understand.