Pernod Ricard to Buy Stake in Tequila Maker Backed by Country Star George Strait
Deal for Codigo 1530 Tequila set to boost French distiller’s exposure to premium spirits in the U.S.
Pernod Ricard SA PRNDY 4.03% has agreed to buy a majority stake in Codigo 1530 Tequila, a premium spirits brand backed by country-music star George Strait, in the distiller’s latest move to boost its exposure to high-end booze in the U.S.
The French company said late Monday it would pay an undisclosed sum to acquire a majority stake in Codigo, which produces a range of ultrapremium and prestige tequilas.
Companies across the alcohol industry have sought to boost their exposure to higher-end products in recent years as drinkers show an increasing willingness to pay up for pricier booze—a trend that accelerated during the pandemic and has boosted sales of Scotch, bourbon and tequila.
Pernod said Codigo would complement its broad portfolio of products, which already include Absolut vodka and Jameson whiskey, and that its experience in the distribution of premium brands would help the tequila maker reach new drinkers.
Código is already available within 50 states across the U.S. and is at the early stage of its international development with a presence in over 30 markets, the company said.
Código was founded in 2016 by Ron Snyder, Federico Vaughan and Mr. Strait—who has sold millions of records—and produces its drinks in the Mexican state of Jalisco.
Analysts at Jefferies said the deal for Codigo was a good strategic fit with Pernod’s existing agave-spirits portfolio. While this category makes up only a small percentage of Pernod’s sales, tequila is a major driver of growth in the important premium segment, the analysts said.
Jefferies, citing data from industry tracker IWSR, said Codigo’s average price point is $812 a case or $68 a bottle. It also said, per IWSR data, that Codigo sold about 35,900 cases in 2021, with a retail-sales value of $29 million, leading it to estimate supplier sales of around $15 million.
News of the Codigo deal comes on the heels of two similar moves by Pernod last week. The company said it would take a minority stake in sotol brand Nocheluna, which is set to be launched across the U.S. in the coming months and is backed by rock musician Lenny Kravitz. Pernod also said it would raise its stake in U.S. group Sovereign Brands, which owns a portfolio of super-premium wine and spirits brands.