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Mergers & Acquisitions in the Global Drinks Industry

Mergers and Acquisitions in the Global Drinks Industry

The large-scale mergers and acquisitions that have taken place in the global drinks industry within the past ten years have consolidated the ownership of some of the worldÆs most significant wine and spirit brands into the hands of a few large companies. This is partly the result of increased globalization in the industry, and partly due to the usual strategy of companies seeking to continue delivering increasing returns to their shareholders as their corporations mature and their growth slows (Arno). However, in spite of the substantial consolidation that has already taken place, merger and acquisition activity in the global wine market is by no means over. A growing number of players want to become global wine producers and capitalize on the increasing demand for wine in developed and emerging markets (Cazin).

Perhaps the most telling evidence of the trend is the merger of MKF Group LLP, the U.S.-based wine business advisors and International Wine Consultants PTY, Ltd, the wine industry merchant bank. This merger was not effected to produce a new wine company, however, but the worldÆs first global wine investment bank, Global Wine Partners (GWP), LLC (Talbert 1). Vic Motto, Chairman and CEO of GWP, explains why a global wine investment bank is needed in todayÆs market. ôThe wine business is growing twice as fast as the general economy,ö he begins, then goes on to explain:

The wine industry is more complex financially and very different from most other businesses. It demands specialists who understand this complex, capital intensive business, with its very long operating cycle (Talbert 1).

Motto believes that acquisitions and mergers in the wine industry are about to take off, positing that ôThere will be at least a billion dollars in winery transactions in the next few years,ö underlining the need for a global wine investment bank like GWP (Talbert 1)...

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