US – Bacardi has increased its stake to 75% in D’Ussé, the super-premium cognac brand, to resolve an ugly legal battle with entertainer and businessman Jay-Z.
In October 2022, it was revealed that the t rapper filed a lawsuit against Bacardi for a lack of transparency in the partnership. Jay-Z had first sued Bacardi subsidiary Empire Investments Inc. seeking to get information about D’Ussé’s sales and records.
Jay-Z had attempted to exit D’Ussé under a “put option” in the original joint venture contract. 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.
“According to documents, Jay-Z’s company, SC Liquor, exercised its right to a buyout about a year ago. Under their agreement, Bacardi now has to ‘negotiate in good faith to come up with a fair price for Jay’s stake in D’Ussé,” TMZ reports.
Jay-Z asked Bacardi to buy out his 50% stake for US$2.5 billion, according to court documents, and the liquor company came back with a US$460 million valuation for the same shares.
The partnership began in 2012 when the Brooklyn native teamed with Bacardi to launch the multi-billion-dollar brand, according to a release announcing the deal.
The brand has outpaced cognac category growth in the last three years at a compound annual growth rate of more than 30% in the past three years, according to 2021 IWSR data cited by Bacardi.
With the sale ending the legal battle, Jay-Z will still maintain a “significant ownership stake” through his company, SCLiquor LLC.
Although the details of the deal have not been made public, Jay-Z has estimated the value of D’Usse at $3 billion, while SCLiquor believes it is worth up to $5 billion.
This is the second premium alcohol brand the hip-hop billionaire has shot to stardom and been able to sell a large stake to a major producer.
The other deal for his other premium alcohol brand, Champagne brand Armand de Brignac, involved Moët Hennessy Louis Vuitton, which bought half of the brand.
The lucrative premium alcohol space has also attracted other celebrities that have entered into transactions with multinational alcoholic giants.
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 in Dos Hombres, the artisanal mezcal brand created by “Breaking Bad” stars Bryan Cranston and Aaron Paul, for an undisclosed amount.
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