Campari Group is boosting its Kentucky bourbon portfolio by taking a majority stake in Wilderness Trail Distillery, the company announced today. The move comes at a time when American whiskey continues to rise, and particularly higher-priced brands.
The Italian spirits company reached an agreement to acquire a 70% stake in the bourbon and rye whiskey producer, with the option to acquire the remaining 30% in 2031. The current stake is valued at $420 million, with complete ownership valued at $600 million. That would be one of the largest acquisitions for Campari, second to its purchase of Grand Marnier in 2016.
It’s not the first big whiskey move for Campari, which entered the bourbon category in 2009 by acquiring the iconic brand and distillery Wild Turkey from Pernod Ricard. Now, Campari will significantly expand its production capacity and inventory to meet growth plans for its premium bourbons, such as the high potential Whiskey Barons range, which are currently capped due to capacity constraints, according to chief executive Bob Kunze-Concewitz.
“By adding the fast-growing super premium Wilderness Trail brand we further expand and premiumize our bourbon offering, priming it to become Campari Group’s second major leg after the aperitif portfolio,” Kunze-Concewitz said in a statement.
Wilderness Trail is expected to generate $57 million in sales this year, up 39% from the prior year, according to Campari. The distillery’s founders and current shareholders, Shane Baker and Pat Heist, launched their first whiskeys in 2018, building on their experience advising other spirit companies on production and fermentation. The portfolio now includes a high-end 6-year and 8-year bourbon line.
“Premium Bourbon and rye whiskies and state-of-the art production facilities coupled with worldwide distribution, first-class marketing and expertise across multiple spirit categories provide the perfect foundation for the continued success of the Wilderness Trail brand and ensure it will be enjoyed around the world for years to come,” said the co-founders in a statement.
U.S. sales for bourbon, Tennessee whiskey and rye whiskey are on the rise and went up by 6.7% to $4.6 billion in 2021, according to the Distilled Spirits Council of the U.S. (DISCUS). Most domestically produced whiskey is still consumed in the U.S. but international consumer demand for American whiskey has also grown, with exports topping $971 million in 2021, accounting for 62% of U.S. spirit exports, according to the same report. The super-premium segment also climbed by 17%, reflecting trends for premiumization across several spirit categories.
Earlier this year, Campari also announced a Rare portfolio— a division to grow its super-premium-and-above brands in certain U.S. markets. The division will incubate brands across the cognac, rum, bourbon, and other spirit and champagne categories, with an initial focus on building brand equity building and developing a route-to-market in California, Texas and Florida, with future plans to scale up.
While experts have warned that the economic slowdown may soften demand for super-premium spirits, the category is largely recession-resistant— and other major players are also betting on the segment’s long-term growth. In the past two months Brown-Forman acquired two leading super premium and higher brands, Venezuelan rum Diplomático and Gin Mare. This month, Pernod Ricard acquired a majority stake in Código 1530 Tequila, the ultra-premium tequila co-founded by country music singer George Strait.
In August, Campari also announced an agreement with Catalyst Spirits to acquire an initial 15% interest in Howler Head Bourbon, with a medium-term route to total ownership and exclusive global distribution rights. Launched in 2021, Howler Head produces a banana-flavored super-premium Kentucky Straight Bourbon Whiskey. The label is owned by whiskey entrepreneur Steve Lipp and Wooler Brands, Inc. CEO Jason Wooler.
Campari’s commitment to brown spirits comes after it recorded double-digit gains for the first nine months of 2022. Wild Turkey Bourbon was up by 22.1%, led by strong performances in South Korea and the U.S., and Russell’s Reserve increased by 36.6%. The group’s performance was boosted by its apértifs performing well in peak season, enhanced by favorable weather conditions, as well as brown spirits, according to the group.