This has little to do with whiskey directly, but it's a big news day for people who follow the distilled spirits business, and anything that shakes up the industry this much is bound to affect whiskey at some point.
Today The Big Galoot (my pet name for Diageo) got a little smaller, as the other shoe dropped in the ongoing saga of Diageo and Jose Cuervo Tequila in the U.S. market.
Here's the synopsis of our story thus far. Jose Cuervo is far and away the best selling tequila in the U.S., fluctuating in recent years between 3.5 and 3.9 million cases, and trending down. Diageo doesn't own Cuervo, it's merely the distributor, and that contract ends June 30. Diageo tried to buy Cuervo from its owners, the Beckmann family, but that fell apart in December.
So the question has been, what's next for Cuervo? A new distribution deal with Diageo? Someone else? A sale to someone else? Or self-distribution?
Five years ago, the Beckmanns established a distribution company in the U.S. called Proximo Spirits, which sells 1800 Tequila, 3 Olives Vodka, and other small brands. Taking on Cuervo will more than double Proximo's size, so that was by no means a sure thing. It is, however, the choice announced today.
Proximo's only whiskey property is Stranahan's Colorado Whiskey, which is tiny compared to Cuervo but probably the biggest micro-distillery whiskey in the country.
Diageo, meanwhile, will fight back by promoting its other tequilas, principally Don Julio. The other challenge for Cuervo is the current glut of inexpensive, 100%-agave tequilas on the market. The other story this may impact is the ongoing speculation that Diageo will make a play for Beam Inc. Jim Beam itself is the prize, but does the fact that Beam owns Sauza, the #2 tequila, make such a move more or less likely? Only time will tell.