Lion Nathan has added another spirit to its stable by buying Australia's Inner Circle Rum, which has won awards for the world's best rum for the past three years.
The price wasn't disclosed but Macquarie Equities Research said it would be surprised if Lion paid more than A$10
million ($11.3 million) to Inner Circle founder Stuart Gilbert.
The acquisition comes after Lion Nathan failed to pick up New Zealand's Independent Liquor late last year. But a spokesman indicated Inner Circle - which used to be distributed by Independent - was not merely a consolation prize.
Lion Nathan - traditionally a beer seller - started a spirits joint venture with Bacardi in Australia several years ago, distributing Bacardi products.
Then - before the possibility of purchasing Independent arose - Lion Nathan announced its intention to get further into spirits and ready-to-drink (RTD) products.
The McKenna Kentucky Straight Bourbon brand was acquired and was being rolled out nationally. Buying Inner Circle was an extension of this type of activity.
Lion Nathan Australia managing director Andrew Reeves said while Inner Circle was a relatively small brand the company intended to invest in its development.
Inner Circle is available in full-strength spirits and in RTDs.
The brand sources supplies from South Pacific contractors and is fully developing an Australian distillery.
Lion Nathan said dark rum retail sales were worth about A$550 million a year. Full strength bottled dark rum sales were growing around 3 per cent a year, and rum RTD sales by about 5 per cent.
Macquarie estimated Inner Circle had about a 1.3 per cent share of the Australian rum market with sales worth A$7 million.
It said it would not be easy growing its share of that market, which is dominated by Bundaberg.
Lion's challenge would be to position Inner Circle as a credible or even superior alternative.
