FORTY-CREEK-CAMPARI

Forty Creek Distillery sold to Campari

March 12, 2014

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Milan, 12 March 2014 – Italy’s Gruppo Campari has reached an agreement to acquire 100% of Forty Creek Distillery Ltd. (FCD), the leading independently owned whisky company in Canada. This transaction marks Campari’s first move into the growing and attractive Canadian whisky category with high-end premium products.

With its flagship brand Forty Creek Whisky, FCD is the fastest growing player in the Canadian whisky category in Canada. Moreover, it is well positioned in the key US market to capitalize on the high potential offered by the Canadian whisky category. A small- to medium-sized distillery, by Canadian standards Forty Creek has 3 stills with capacity to produce the equivalent of 555,000 cases of whisky. Present volumes are significantly lower than that, leaving room for growth under Campari.

According to John Hall, FCD founder, and Whisky Maker, “Today’s deal represents a milestone for myself and the entire Forty Creek team. I believe this opportunity will further support Forty Creek’s vision to produce unique, quality, handcrafted, Canadian-made spirits. Campari has the global ability to take Forty Creek to the next level.”

“Introducing customers around the world to my whisky is a dream come true, Hall continues. I am very excited to continue to devote my time to whisky making at Forty Creek distillery, continuing my whisky journey and exploring my passion for additional Forty Creek whisky expressions.”

From the perspective of Campari Chief Executive Officer, Bob Kunze-Concewitz’s, “With Forty Creek Distillery, producer of the award winning Forty Creek range of premium Canadian whiskies, we are once again leveraging our acquisition framework in a very disciplined and consistent manner for long-term growth. Via the entry to the large and growing Canadian Whisky segment this acquisition further increases our exposure to the highly attractive brown spirits category whilst continuing to enhance our premium portfolio.”

“Moreover, the addition of FCD will enable us to further build our critical mass in key North American markets, providing us with a strong market position in Canada and positioning us for further growth in our core US market. At the same time, our international route to market will also enable the Forty Creek whisky brand to grow faster out of its core North American market. Lastly, through this acquisition we will also be able to internalise key activities in the Canadian market.”

John Hall will remain Chairman of the company and Whisky Maker at Forty Creek Distillery. Over the years, Hall has built a very successful Canadian whisky by creating a hand-crafted product, introducing new expressions regularly, and enhancing the brand’s versatility. As a result he has effectively attracted new consumers beginning to turn to brown spirits and looking for a richer taste. He has been instrumental in creating renewed interest in Canadian whisky, today one of the most attractive whisky categories in North America.

It is excellent news for Canadian whisky lovers that John Hall will continue to guide the distillery and craft its products. Just a couple of weeks ago Hall had commented that he is very excited about his 2014 Fall Limited Release. He expects to have it in bottles by July so it can recover from bottle shock by the time it is released in September.

Campari has agreed to leave all Forty Creek’s business structures and processes in place and unchanged in Canada. Therefore, the distillery will maintain its successful business model in Canada while also benefitting from the additional support the Campari organisation can offer there and in other markets.

The acquisition includes the full portfolio of FCD including stocks, the distillery and manufacturing facilities and a hospitality center located in Grimsby, Ontario. Grimsby is about an hour due south of Toronto, across the tip of Lake Ontario.

FCD brand portfolio includes whisky, vodka, brandy, rum and liqueurs, with Forty Creek Whisky as its core brand. The Forty Creek whisky family includes Barrel Select, Copper Pot Reserve, Forty Creek Cream Whisky and offers high-end, limited releases including Forty Creek Confederation Oak, Double Barrel and an annual special John K. Hall Reserve release. Among others, Campari brands include Wild Turkey bourbon and Skyy Vodka.

Forty Creek whiskies won Canadian Whisky of the Year champion three years running at the Canadian Whisky Awards (2010-12) and recently captured five gold medals as Best Tasting Whiskies at the Beverage Testing Institute competition in Chicago (2014).

In fiscal year ending 31 March 2013, Forty Creek Distillery achieved total net sales of CAD$ 34.2 million, of which Forty Creek Whisky represents around 62%. In fiscal year ending 31 March 2014, Forty Creek is expecting to reach total net sales of CAD$ 39.5 million, showing an increase of +15.6% compared to the previous year.

The total purchase price for 100% of Forty Creek Distillery is CAD$ 185.6 million on a cash free / debt free basis. This corresponds to an EBITDA (earnings before interest, taxes, depreciation, and amortization) multiple of 14.5x 2014 LE (Latest Estimate for fiscal year ending 31 March 2014).

The transaction is expected to close on 2 June 2014. The consideration will be fully paid in cash.


Comments

14 Responses to “Forty Creek Distillery sold to Campari”

  1. Katherine Forgaard-Pullen:

    Does this mean now that we will start to see Forty Creek in southern destinations such as Mexico and the Caribbean? I certainly hope so – especially those resorts that cater to Canadians and think all we drink is Canadian Club.

  2. Bob Parker:

    Love their whiskies. Let’s hope that with the new money they will update their website to accurately reflect the availability of their products and hire someone to answer inquiries. Still waiting after more than a month for a reply.

    • Davin:

      Hi Bob,

      Be patient, as I am sure you can understand now, they’ve been pretty busy.

      Davin

  3. Gail:

    Hope this won’t jack the prices or ruin the taste

    • Davin:

      As long as John Hall is at the helm I think we’re OK.

  4. CBrown:

    Sounds like winner for anyone wanting to try Forty Creek outside Canada. I’d have to have more background on the way Gruppo Campari handles their portfolios before jumping to any great or dire predictions.
    Since FC’s price points are fairly up market to start with I can’t see them taking a jump in the Canadian market.
    Supply on specialty releases might be an issue tho….

  5. Rob D:

    As a Canadian with ancestry in Italy I’m torn. I feel this could be a good thing for Canadian Whisky on the Global Scale. But I feel the 70 dollar price for special release will be a thing of the past in no time. Still hoping for a twenty year anniversary release soon.

  6. John Zad:

    Hope to see Forty Creek come to Connecticut. I was in Canada and a friend got me hooked. Now I make regular trips to Massachusetts to supply me and my friends here that I have loving your Forty Creek. Everyone one of us were faithful Jack Daniels fans, not any more.

  7. Brian D:

    Wow, Congrats John and team great news. Hopefully nothing changes except more recognition for the brand worldwide. Oh and you better not change Whiskey Weekend!

    • paddockjudge:

      Whisky Weekend is very special indeed. It is a labour of love for me to drive 1,000 kilometers and pick up a couple of six packs.
      Can’t wait for September and the 2014 Reserve release.
      2013 was the best weekend in Grimsby yet; looking forward to sharing many more with old and new friends!

  8. Novice:

    The quality of whisky FC makes is indisputable. I was always hesitant to buy such an expensive bottle of whisky but the pride in knowing the profits were going towards a 100 percent independently owned Canadian company did relieve that itch. Selling out to a foreign company is not going to help their image here in Canada.

  9. Jeff:

    Their whiskey is amazing period. As long as the quality remains the same the brand will continue to grow. They do things their own way and it works very well indeed!

  10. Andrew:

    Warning the following statement brings politics into whisky.

    Hmm, it seems with the sale the Distillery has now gone political. Stephen Harper just used it for his pre-election warmup swing through so-called friendly ridings. If this is the NEW FCD then I must find a new favourite whisky. Perhaps new owner thinks all his acquired customers vote Conservative Reform— guess what he’s wrong. Now FCD must offer facilities for other parties to balance a perception of favouritism.

    • Davin:

      I am sure that any party leader who asked to visit Forty Creek would be more than welcome there. Let’s not give John Hall’s generous hospitality to all a cynical political motive.


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