Heaven Hill Brands in Bardstown, Kentucky has announced it will purchase the Black Velvet Canadian Whisky brand, the distillery and its related brands from Constellation Brands. Canadian Black Velvet Whisky, the second-largest selling Canadian whisky in the world, is made at the Black Velvet Distilling Company located in Lethbridge, Canada.
Heaven Hill says the Black Velvet brand fills a gap in its distilled spirits portfolio by substantially expanding sales activities in the Imported Whisky category and fits perfectly with its portfolio of high volume, quality brands like Evan Williams Bourbon, Burnett’s Vodka, Deep Eddy Vodka, Admiral Nelson’s Rums, and Christian Brothers Brandies.
Canadian Whisky made up 7.3% of total distilled spirits volume in 2018 according to Beverage Information Group, the largest segment of all total Imported Whiskey. The Canadian Whisky category is approximately 16.8 million cases, with Black Velvet volume representing almost two million cases in the U.S. in 2018.
“We are excited to add Black Velvet to our iconic group of brands and look forward to growing this historic brand in the months and years ahead,” said Max L. Shapira, President of Heaven Hill Brands. “As we continue to build our business based on strategic acquisitions and innovation, Heaven Hill’s commitment to quality continues to steer the positive outlook for our diverse portfolio.”
Black Velvet Distilling Facility
In addition to acquiring Black Velvet, Heaven Hill will purchase the historic Black Velvet Distilling facility, one of the eight traditional Canadian distilleries in operation. The acquisition includes all the distilling operations, aging and bottling facilities and the remaining portfolio of Canadian Whisky brands owned by Constellation, which includes Black Velvet, MacNaughton, McMasters, and the international business of the Schenley brands – Golden Wedding and OFC.
Black Velvet was developed in 1946 and was first introduced to the market in 1951. Brothers Walter and Alfred Gilbey entered the spirits industry in England in 1857. After experiencing tremendous growth, the brothers expanded the business opening their first gin distillery in England in 1872, and eventually expanding to Canada in 1906. Due to high demand in Canada, the brothers built the W&A Gilbey Distillery producing the first drops of Canadian Gilbey spirits on September 11, 1933. Distillers Crosbie Hucks and John S. Napier joined the team developing a number of Canadian Whiskies, with Black Velvet rising to the top due to mass consumer interest. The 1970’s brought growth for the Canadian Whisky category and in turn, IDV, now Diageo, built Palliser Distiller in Lethbridge, Alberta. The distillery has since been re-named The Black Velvet Distilling Company where the product is still produced today.
Stay Informed: Sign up here for the Distillery Trail free email newsletter and be the first to get all the latest news, trends, job listings and events in your inbox.
$266 Million Sale Price Represents 8 to 9 Times Gross Profit
Constellation Brands said the company expects to receive cash proceeds of approximately $266 million USD, subject to closing adjustments. The net sales for the brands included in the transaction totaled $67 million during Constellation’s fiscal year 2019, and the purchase price represents a multiple of gross profit after marketing in the range of eight to nine times.
“We are relentlessly focused on the consumer and building a portfolio of brands consumers love today, while pushing beyond to meet their evolving needs well into the future,” said Bill Newlands, Constellation Brands president and chief executive officer. “This decision aligns with our consumer-led premiumization strategy to deliver accelerated growth and shareholder value as we continue to focus our wine and spirits portfolio on higher-end, fast-growing brands. For Heaven Hill, Black Velvet is a historic, well-known, and high-volume brand that complements their broad distilled spirits portfolio and aligns with their business strategy.”
Constellation’s portfolio of spirits brands include SVEDKA Vodka, the #1 imported vodka in the U.S.; High West Whiskey, Casa Noble Tequila, Mi CAMPO Tequila, and Nelson’s Green Brier. Constellation’s ventures capital group has made minority investments in higher-end, distinctive spirits brands such as Austin Cocktails, Bardstown Bourbon Company, El Silencio, The Real McCoy, and its most recent investment in Montanya Distillers.
Perella Weinberg Partners LP acted as exclusive financial advisor to Heaven Hill Brands with respect to the transaction. The sale of Black Velvet Canadian Whisky from Constellation Brands to Heaven Hill is expected to close in the second half of 2019, subject to regulatory approval.