Diageo gets into the Brazilian spirit

IF you want to add an extra dash of zest to your samba, then it might be wise to sample a drop of cachaca. This prized part of Brazilian life will soon be under British ownership.

Diageo is buying a maker of Brazil’s most popular spirit, cachaca, for about £300m ($469m), as it expands into regions that have been relatively untouched by the credit crunch.

Diageo, the maker of Johnnie Walker whisky and Smirnoff vodka, aims to get half of its sales from emerging markets by 2015.

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The company said it had agreed to buy Brazil’s Ypioca from its family owners. Ypioca is the third-biggest player in the market for cachaca, a spirit made from fermented sugar cane also known as Brazilian rum. It is a leader in the rapidly-expanding premium segment of the market.

Cachaca accounts for about 80 per cent of the volume of the Brazilian spirits industry and, when mixed with ice, sugar and lime makes the Brazilian cocktail Caipirinha.

Diageo, like other international drinks groups, is looking to build its presence in emerging markets in order to offset sluggish demand in austerity-hit Europe. The group has been in discussions with the owner of Jose Cuervo tequila about taking a stake in the $3bn-plus tequila brand, with some sources saying progress has slowed due to problems about the ultimate control of the brand.

Picture: KeystoneUSA-ZUMA/Rex Features

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