Jamaicans really love their rum
Jamaicans drink three times more rum than all other alcoholic drinks combined, and have shelled out more than J$18 billion for the pleasure of imbibing the sugar-based concoction, according to breakout data on spirits conglomerate Lascelles and its markets.
The information from Gruppo Campari also suggests that the rum market has been growing by more than four per cent annually, but obscures just how much of the market Lascelles and its rum business control.
Campari's presentation to investors shows that the liquor market is split 68 per cent for rum, 18 per cent for beer and 11 per cent for local wine.
Those numbers indicate that Jamaicans consume four times more rum than beer and six times more rum than wine.
The Italian spirits company, which is in the process of acquiring Lascelles, also indicated that industrywide Jamaican rum sales over five years grew from some US$175 million in 2006 to more than US$200 million in 2011.
The rum market has seen new rivals enter the business, including Worthy Park Estates controlled by the Clarke family, and Red Stripe Jamaica, a subsidiary of Diageo Plc.
Lascelles' annual reports generally avoid describing the size of the market or its brand sales within its segment results.
Campari's data indicates that 49.9 per cent of Lascelles wine and spirits volumes are sold domestically, and the other 50.1 per cent were international. Total wines and spirits sales were valued at US$178 million but the rum sales were not differentiated.
Appleton most popular
Additionally, the investor presentation revealed the popularity of Lascelles brands: its prized Appleton brand accounts for 32 per cent of total sales; the cheaper Wray & Nephew overproof rums, 22 per cent; its roots wine Magnum 12.5 per cent; and Coruba rum 7.7 per cent.
Local sales account for half of total sales, Canada 10.4 per cent, Caribbean 7.7 per cent, Mexico 7.3 per cent, United States 6.0 per cent, New Zealand 2.8 per cent and the rest of the world 11.2 per cent.
Campari stated that it would target growth in the US, the largest rum market along with Italy and Australia, via its established distribution channels.
"Gruppo Campari is well positioned to develop the acquired portfolio beyond its core export markets by leveraging the international appeal of the rum categories coupled with strong Campari's distribution capabilities," it stated.
Campari will offer cash of US$415.75 million for Lascelles - US$4.32 per ordinary share and US$0.57 per preference share - for 100 per cent of Lascelles. It already has a deal with CL Financial for 81.4 per cent of its shares.
The takeover bid price is 15 times earning before interest tax, depreciation and amortisation or EBITDA. The EBITDA of the acquired businesses was estimated at US$27.7 million over a one-year period ending June 2012.
Campari said the acquisition would be fully financed by loans underwritten by Banc of America Securities, Banca Intesa and Deutsche Bank.
Former managing director at Lascelles William McConnell told Sunday Business that the offer price was fair, given uncertainties about another global recession.
Companies bought brands for up to 25 times EBITDA in pre-2008 recessionary periods, McConnell said.
The deal for Lascelles covers the spirits and merchandising operations only. The conglomerate's transport, investment and insurance components are being sold off ahead of the deal's consummation.
The general insurance business was sold last week to Guardian Holdings in a US$38 million transaction. That deal closes at the end of November.
The sale of Lascelles is expected to close by year-end.