Diageo cheers vodka sales as it mulls buy out of Ketel One

City A.M. Reporter
SPIRITS group Diageo yesterday said it would consider buying out the 50 per cent of premium vodka brand Ketel One it does not already own if it came on the market.

The owner of Smirnoff vodka paid $900m (£559.1m) in 2008 to acquire half of Ketel One and form an exclusive marketing and distribution joint venture with the brand’s Dutch founders, the Nolet Group.

“If they did decide they (Nolet) wanted to sell, we’d be interested in looking at it,” said global brand director Peter Fairbrother ahead of an investor presentation yesterday.

Diageo is fuelling its push into fast-growing emerging markets through acquisitions. It bought a majority stake in Indian-owned United Spirits last month and it is in long-running talks to buy tequila maker Jose Cuervo.

The Nolet family had been making vodka in the Netherlands for 10 generations, when the Ketel One brand’s popularity with US bartenders caught Diageo's eye in 2008, as it worked to turn around declining sales growth of the white spirit.

Diageo said vodka grew 4.7 per cent outside the former Soviet Union in 2012 and formed 12 per cent of the net sales value of Diageo, which also sells drinks such as Johnnie Walker whisky and Guinness.

In its key US market a focus on expensive celebrity endorsements from the likes of Sean “Diddy” Combs and Madonna had paid off, the company said, while the launch of new Smirnoff flavours such as fluffed marshmallow and whipped cream had performed above its expectations.