Watchdog to probe into Diageo’s acquisition of Chase distillery

United Kingdom | The Competition regulator announced on 8 January 2021 that it will probe Diageo’s intended purchase of Chase Distillery.

The Competition & Markets Authority said it is considering whether the deal will result in the “substantial lessening of competition within any market or markets in the UK for goods or services”. The gin boom – also called the “ginaissance” – has helped the total number of UK distilleries to more than double in the past five years, from 180 to about than 440 in 2019, of which 228 were in England alone. There are now more distilleries in England than in Scotland.

Drinks company Diageo first announced the deal to buy the award-winning field-to-bottle distillery from Herefordshire in mid-October.

The takeover, for an undisclosed amount, will see the Johnnie Walker and Gordon’s owner further expand its UK gin business, as customer demand for premium spirits continues to surge.

It comes months after Diageo bought actor Ryan Reynolds-backed Aviation American Gin in a deal worth up to USD 610 million. The acquisition was completed on 30 September 2020.

Turning potatoes into gold

Chase Distillery was founded in 2008 by William Chase, 60, a farmer, who had the great idea of turning his potatoes, first into crisps (the Tyrrells brand) and then into vodka. The distillery has a portfolio which includes seven gins, four vodkas and an elderflower liqueur. Chase also moved into hard seltzers with the launch of a gin-based range.

Per the trade magazine The Grocer, the distillery generated GBP 13.6 million (USD 19 million) in revenue in the 12 months to the end of 2019, according to accounts filed at Companies House. However, it made a pre-tax loss of GBP 122,000 (USD 170,000) in 2019, compared with GBP 1.2 million in profits in the prior financial period, as it invested more in marketing the brand.