What you need to know:

• Pernod Ricard is rumored to be acquiring a minority stake in Mexican whisky brand Abasolo.
• The acquisition is due to be announced any time today and will come on the back of Pernod Ricard’s acquisition of online spirits retailer The Whisky Exchange, and will be their second dealing with Casa Lumbre, the company that owns Abasolo.
• Last year Pernod Ricard also acquired a minority stake in Casa Lumbre’s mezcal brand Ojo de Tigre.
• These bolt-on acquisitions have been seemingly become more common lately, and represents a great deal for both the spirits giants and the distilleries.
• The distillery gets more resources to expand production and a larger platform for marketing and distribution, while the spirits giants gets a new brand that it’ll hope makes hardened drinkers do a double stake. It’s a win-win!
• Read our review of Abasolo whisky here and find out why Pernod Ricard had to acquire it!

(Image Source: Hotels.com, Inside Hook)

Spirits giant Pernod Ricard seems to be continuing on its acquisition spree with a minority stake in Mexican whisky brand Abasolo, which belongs to company Casa Lumbre.

Abasolo is the first distillery to make Mexican whisky with 100% Mexican Cacahuazintle corn. It is located in Jilotepec de Abasolo, Mexico, and is the first distillery devoted to crafting Mexican whisky. The distillery uses double pot distillation and matures their whisky for 24 months in American Oak and new medium-toasted barrels before bottling at 43% Abv.

 Nixtamalisation is a traditional South American method of preparing corn or maize which allows it to be easier to ground, has less toxins and more importantly intensifies the corn-y flavor which is most obvious in a fresh tortilla. (Image Source: Futurity.org)

The distillery is unique in putting the corn through nixtamalization, which is also how they make your favorite tortillas by the way, where the corn is traditionally soaked and cooked in limewater before washing and hulling the grain. Subsequently the corn is roasted and milled, while some of it is also malted and added to the mash.

This is what gives tortillas that distinctive intense taste of fresh, sweet, buttery steamed corn that is also somewhat malty, roasty and chewy with a slightly fermented vegetal character.

The unique taste that nixtamalization provides is most apparent in freshly prepared tortillas. (Image Source: el blog de al Arux)

This has not been officially announced, but according to Bloomberg, it could be announced as soon as today.

If it is indeed the case, this would be hot off the heels of its acquisition of online spirits retailer The Whisky Exchange and would also be its second dealing with Casa Lumbre, from whom it acquired a minority stake in mezcal brand Ojo de Tigre last year. 

More details coming up! Click here to read our review of Abasolo Whisky.

My take

The whisky industry and the broader spirits sector have been hot with acquisitions lately, with other spirits giants such as Diageo acquiring a minority stake in Japanese craft whisky distillery Kanosuke. In the world of finance, these are known as bolt-on or tuck-in acquisitions, where a larger company acquires smaller companies of strategic interests in the same line of business.

A wonderful addition to the portfolio in my humble opinion. (Image Source: New York Times)

Such corporate actions are beneficial for both parties as it grants the smaller company a larger platform for marketing, distribution and also operational benefits through economies of scale (such as streamlining sourcing of raw materials that can be done in bulk). For the larger company, this allows them to extend their reach with minimal disruption or added risk to their corporate structure, while allowing them to also access unique brands, practices or technologies that would otherwise be costlier to develop organically – all at only a small cost to the company.

 Whatever Casa Lumbre is doing, it's certainly doing it right, with Ojo de Tigre and Abasolo acquired by Pernod Ricard and Campari Group acquiring Montelobos and Ancho Reyes, its brands are on fire. (Image Source: Casa Lumbre)

The pattern you observe thus far is that most of these acquisitions have only been a minority stake, as such the giant is able to tiptoe into these distilleries without fully committing, while also giving these distilleries a much needed shot in the arm to spur growth. It’s kinda like betting on a couple of seeds, hoping that one of them turns out to be a winner.

I think the reality is with so many new distilleries on the horizon, it’s almost a game of lottery to guess which ones will succeed, yet at the same time these giants can only press their workhorses such as Aberlour and Glenlivet so hard, beyond which achieving material growth is like squeezing blood out of a rock – everyone who wants to drink Aberlour has already drank Aberlour.

Who doesn't love tacos? I've found Abasolo wildly underrated. It is so unique in bringing in tortilla-esque flavors to whisky. (Image Source: Time Out)

These small acquisitions allows the giants to bring something new and fresh to the table, hopefully attracting some double-takes from seasoned enthusiasts who’ve memorized the liquor store like the back of their hand. And why not, they’ve already built a platform and distribution system and cash is aplenty, so why not bet on lucky race horse #7 and hope it becomes a winner. 

If you wanna know what that tastes like, check out our review of Abasolo Whisky here.

Kanpai!

@111hotpot