Dive Brief:
- Bacardi resolved a legal battle with entertainer and businessman Jay-Z by buying a majority of his stake in D’Ussé, the super-premium cognac brand he developed with the alcoholic beverage maker. Bacardi now owns at least 75.01% of the brand, Shawn Carter, known professionally as Jay-Z, retains a “significant ownership stake.”
- D’Ussé is a multi-billion dollar brand, according to a release announcing the deal. It has received several awards at spirits competitions, and has outpaced cognac category growth in the last three years at a compound annual growth rate of more than 30%, according to 2021 IWSR data cited by Bacardi.
- This marks the second alcoholic beverage brand Jay-Z has developed and sold a large portion of his share. In 2021, Moët Hennessy Louis Vuitton bought a 50% stake in the entertainer’s Armand de Brignac Champagne.
Dive Insight:
While this deal could be beneficial to both Jay-Z and Bacardi, it was born out of an ugly legal dispute.
Jay-Z had first sued Bacardi subsidiary Empire Investments Inc. in October, seeking to get information about D’Ussé’s sales and records. The entertainer and businessman had been interested in selling part of his stake to the liquor company, and found himself stonewalled. The lawsuit claims Bacardi had been minimizing production and distribution of the cognac on purpose as an attempt to reduce the price it would pay to purchase Jay-Z’s stake.
During the court fight, information came out that Jay-Z made an offer for a Bacardi buyout that valued his half of the business at $1.5 billion. Bacardi’s calculation of the mogul’s half was $460 million.
As the issue worked its way before arbitrators, Jay-Z filed another lawsuit, arguing there were racist members of the arbitration panel.
The sale ends the legal battle. While the terms of the sale have not been disclosed, Jay-Z still has a sizable stake in the company, meaning his influence and the cachet it brings to D’Ussé are not likely to go away any time soon.
Jay-Z, who Forbes named hip-hop’s first billionaire in 2019, made his fortune mostly through business deals. This is the second premium alcohol brand he’s shot to stardom, and been able to sell a large stake to a major producer. The deal for his other premium alcohol brand, Champagne brand Armand de Brignac, was much less acrimonious. Jay-Z started investing in the brand soon after he first touted it in a 2006 music video. By 2014, he bought out all other investors, becoming Armand de Brignac’s sole owner. And in 2021, Moët Hennessy Louis Vuitton bought half of the brand.
Jay-Z is not the only celebrity to get involved in the premium alcohol space, and many celebrity brands have been hot M&A targets. In 2020, Diageo bought Aviation American Gin — partially owned by actor Ryan Reynolds — for $610 million. In 2017 it purchased Casamigos, the super-premium alcohol brand part-owned by actor George Clooney, for up to $1 billion. In 2021, Constellation Brands’ venture capital unit bought a minority stake of Dos Hombres, the artisanal mezcal brand created by “Breaking Bad” stars Bryan Cranston and Aaron Paul, for an undisclosed amount.
