Bacardi Teams with Brown-Forman in US Distribution Deal

04 April 2002

Alcoholic drinks firms Bacardi and Brown-Forman (owner of Jack Daniel’s whiskey) are to form a US distribution joint venture branded the Gemini Alliance.

The purpose of the venture is to cultivate relationships with distributors, brokers and state alcohol control boards. In the US, spirits firms are not allowed to deal direct with retailers, resulting in a labyrinthine middle tier of wholesalers and, in ‘control states’, government boards to oversee the distribution of alcohol – a situation drinks companies complain inhibits their ability to get close to the consumer.

However, after its purchase of part of Seagram’s drinks portfolio, spirits market leader Diageo began to use its clout to make wholesalers set up special sales forces for its products. The Gemini Alliance intends to build similar relationships.

The two partners claim about 8% market share each, putting them in joint third place behind Diageo (27%) and Fortune Brands (12%). Other than its flagship rum, Bacardi sells Dewar’s Scotch, Disaronno amaretto, Drambuie and Bombay Sapphire gin in the US, while Brown-Forman produces Southern Comfort and distributes Finlandia vodka.

Links already exist between the two firms, with Bacardi distributing its partner’s products in much of Europe. However, the duo denied that the latest deal presaged a merger.

It is not yet known in which states the alliance will be introduced first. Brown-Forman revealed that, as well as producing “substantial” savings, the venture would allow the hiring of sales staff in towns where previously the costs would have been too high.

Brown-Forman does not expect serious regulatory opposition to the deal.

Data sourced from: Financial Times; additional content by WARC staff