Global liquor giant Diageo buys out local brand Don Papa in deal worth US$280 million

British liquor giant Diageo is buying Philippine premium rum brand Don Papa as it gears up to introduce rum as a “super-premium” liquor alongside whiskey and tequila.

Diageo’s acquisition of Don Papa Rum cost an upfront sale of EUR260 million (US$280 million), but could go up by an extra EUR177.5 million (US$191.7 million) through 2028, depending on the brand’s performance. The company added that this reflected their optimism on the brand’s growth potential, believing that the demand for expensive spirits will remain robust despite a slowing global economy.

With the acquisition, Don Papa joins Diageo’s 200-brand portfolio, including household names such as Johnnie Walker, Tanqueray, Smirnoff, and Baileys. Before the sale, Diageo only carried one rum brand: the mass-market product Captain Morgan.

Diageo’s purchase of Don Papa showcases the company gearing up for the growth of high-end rum in global markets. They said that the “super-premium plus segment” of the rum category is in the early stages of premiumization (where people are willing to pay more for a quality product), citing a compound annual growth rate (CAGR) of 18 percent in Europe and 27 percent in the US between 2016-2021.

“Through the same period, Don Papa Rum consistently outperformed the market in Europe, delivering a 29 percent CAGR,” Diageo said.

Don Papa was founded in 2012 by Andrew Carroll, a former Rémy Cointreau executive, and Andrew John Garcia, with much of its production and brand story rooted in Negros Occidental, home to the Philippines’ sugarcane industry whose sugar and molasses supply date back to the colonial Spanish period. Carroll will stay on with Don Papa and work closely with Diageo.

Don Papa is currently being sold in 30 countries, with France, Germany and Italy being its largest markets.