Bacardi: in high spirits over 42 Below purchase

The news that Bacardi is set to acquire 42 Below, a leading New Zealand-based spirits company, will add another global brand to the liquor firm's burgeoning premium offerings, and further exemplifies the growing appeal of distinctive, upscale beverages in both the US and abroad.
Bacardi has offered to pay NZ$138 million (US$91 million) for 42 Below, which makes the vodka brand of the same name, as well as South Gin and Seven Tiki White Rum. 42 Below has been hailed as one of the fastest growing companies in New Zealand, and has received numerous accolades for its flagship vodka, including gold prize at the 44th World Selection of Spirits and Liqueurs show, which was held in Belgium this year.

The purchase highlights the trend for premiumization in the alcohol market. This trend is currently being playing out strongly in numerous spirits and beer markets across the globe, especially imported categories, as luxury goods become more relevant to the mass-market consumer.

Bacardi already owns one high profile premium vodka brand, Grey Goose, which it purchased in 2004 for a substantial $2.3 billion. Although 42 Below has been priced much lower than this, both brands share similar features. First, the vodka brands both have a high price point - around $30 in the US.

Second, 42 Below is made in New Zealand and Grey Goose in France, both of which are not well-known vodka producing nations. These unusual manufacturing locations provide the brands with good degree of differentiation from the competition, although many more French-made vodkas have appeared on the market since Grey Goose's success.

Bacardi is no doubt counting on the success of Grey Goose - the group's second largest brand in the US - to rub off on 42 Below. Indeed, the newly-acquired vodka brand has already proved to be a huge success on its own, and is available in 25 countries around the world.

Although 42 Below is not likely to become such a leading star as Grey Goose in Bacardi's spirit portfolio, the rapid success of the company in New Zealand bodes well for the distribution of its premium brands further afield - and this is something which Bacardi no doubt plans to embark upon with no small degree of enthusiasm.

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