Campari Acquires Stake in Wilderness Trail Distillery

Bourbon primed to become the second major leg of Campari Group after aperitifs.

Wilderness Trail super premium bourbon and rye whiskey range to further strengthen Campari Group’s brand portfolio leveraging one of the fastest growing spirit categories in the core US market.

Campari Group announced it has reached an agreement to purchase an initial 70% interest, and in 2031 the remaining 30% interest, of the outstanding capital of Wilderness Trail Distillery, LLC.

Wilderness Trail Distillery, located in Danville, Kentucky,, was launched in 2012 as a ‘premium craft distillery’ with a clear focus on making the highest quality bourbon and rye whiskey. Leveraging the advanced and versatile operational infrastructure, the founders launched in 2018 two premium proprietary Wilderness Trail expressions: Wilderness Trail Bourbon and Wilderness Trail Rye Whiskey. The portfolio has been further premiumised with the introduction of the high-end silver label 6-year and 8-year bourbon line for a deeper and mature flavor. The average selling prices range from USD55 for the 75cl Wilderness Trail Bourbon to USD75+ for the 6 & 8-year old bourbon expressions.

The founders and current shareholders, Shane Baker and Dr. Pat Heist, are fermentation experts with more than 20 years’ experience in the production of whiskey, consistently recognised as pioneers in the engineering, research and development, fermentation and distilling activities. The distillery’s proprietary infusion mashing process and sweet mash technique have a highly flexible output driven by the multiple mash bills and yeast strains, crafting bourbons and rye whiskeys with distinctive flavours.

Bob Kunze-Concewitz, Chief Executive Officer Campari Group: ‘We are very excited to take a controlling interest in world-class Wilderness Trail Distillery. By adding the fast-growing super premium Wilderness Trail brand we further expand and premiumise our bourbon offering, priming it to become Campari Group’s second major leg after the aperitif portfolio. Moreover, we accelerate our premiumisation journey, further enriching our RARE portfolio, the division aimed to unlock and accelerate the growth potential of a select range of high-end individual expressions in our core premium spirits markets. In addition, we have the opportunity to significantly expand our production capacity and ageing inventory to satisfy the future growth of our premium bourbons, such as the high potential Whiskey Barons range, currently capped due to capacity constraints. We are very excited to partner with such a strong team of experts allowing us to accelerate and significantly expand the innovation platform for our bourbon portfolio.’.

“We are thrilled about our partnership with Campari Group. Premium bourbon and rye whiskies and state-of-the art production facilities coupled with worldwide distribution, first class marketing and expertise across multiple spirit categories provide the perfect foundation for the continued success of the Wilderness Trail brand and ensure it will be enjoyed around the world for years to come. This is a win-win situation for both parties and we are very proud of this partnership and what we can achieve together with our shared vision.”

– Shane Baker and Dr. Pat Heist, Co-Founders of Wilderness Trail Distillery

Campari Group’s bourbon journey started in 2009 via the acquisition of the Wild Turkey brand and distillery. Since then, Campari Group has relentlessly focused on the premiumisation journey of the Wild Turkey franchise, featuring also the upgrade and growth acceleration of craft bourbon Russell’s Reserve and the launch of small-batch bourbon Longbranch in 2018 in partnership with Matthew McConaughey.

In 2017 Campari Group also launched its ultra-premium Whisky Barons Collection, including Old Ripy, Bond & Lillard and William Butler Saffell. Lastly, in August 2022, Campari acquired an initial minority interest with path to control in Howler Head, a Kentucky Straight Bourbon Whiskey with Natural Banana Flavor, together with exclusive global distribution rights.

American whiskey is currently among the hottest spirits category in the US market, leveraging the continued positive trend across brown spirits, premium classic cocktail revival and mixology. It accounted for 13% of the total US spirits markets in 2021 in value terms, showing a growth of 7% versus previous year with the super-premium price segment outperforming at +17%2.

For the fiscal year ended on 31 December 2021, the acquired business achieved overall net sales of USD40.8 million, including net sales from Wilderness Trail Distillery bourbon and rye brand of USD7.2 million and the balance generated by bulk sales as well as storage fees and visitor centre, and an EBITDA of USD22.7 million under US GAAP.

For the fiscal year ending on 31 December 2022, the acquired business is expected to generate overall sales of c. USD57 million, an increase of c.39% vs. previous year, with an increasing weight of the higher margin business generated by the Wilderness Trail bourbon and rye brand versus bulk sales, and an EBITDA of c. USD37 million under local GAAP (an increase of c.64% vs. previous year).

The consideration amounts to USD420 million (or €420 million) for the initial 70% of the outstanding capital. The corresponding enterprise value for 100% of the outstanding capital is USD600 million (or €600 million), on a cash free/debt free basis, equivalent to a multiple of c.16 times the expected 2022 EBITDA.

Campari Group will acquire the remaining 30% of the outstanding capital subject to a call/put option exercisable in 2031 at an enterprise value determined by applying the above multiple to the higher of 2030 or average of 2028-2030 EBITDA.

As of 30 September 2022, the inventory’s book value amounted to USD24.0 million, exclusively composed of Wilderness Trail bourbon and rye (bulk production is sold as new make hence no inventory is built on bulk).

The purchase price to be paid at the closing will be funded using a combination of available cash and bank term loans. As a result of the acquisition, Campari Group’s Net debt/EBITDA-adjusted on a pro-forma basis is expected to increase from current 1.5 times to 2.3 times upon the deal closing on a pro-forma basis.

The transaction, which is subject to customary closing conditions, is expected to close before the end of the 2022 calendar year. Until the transaction closes, each company will continue to operate independently.

William Blair & Company acted as exclusive financial advisor to the sellers and Benesch, Friedlander, Coplan and Aronoff LLP acted as their legal advisor. McDermott Will & Emery LLP acted as tax and legal advisor to Campari Group.

ABOUT CAMPARI GROUP
Campari Group is a major player in the global spirits industry, with a portfolio of over 50 premium and super premium brands, spreading across Global, Regional and Local priorities. Global Priorities, the Group’s key focus, include Aperol, Campari, SKYY, Grand Marnier, Wild Turkey and Appleton Estate. The Group was founded in 1860 and today is the sixth-largest player worldwide in the premium spirits industry. It has a global distribution reach, trading in over 190 nations around the world with leading positions in Europe and the Americas. Campari Group’s growth strategy aims to combine organic growth through strong brand
building and external growth via selective acquisitions of brands and businesses.

Wilderness Trail is recognized as the 14th largest Bourbon Distillery with award-winning Kentucky Bourbon and Rye Whiskey brands known as Wilderness Trail Small Batch, Bottled in Bond made from a proprietary infusion process and the original genuine sweet mash process.