(Bloomberg) -- Berlin startups typically conjure up images of tech companies run by tattooed kids in skinny jeans who commute from cheap apartments to industrial-loft offices on fixie bikes. Sebastian Brack and Maximilian Wagner had a more traditional take: Vermouth, the herb-infused wine that’s the basis of many cocktails.
In 2013, the duo founded Belsazar GmbH to produce vermouth using wines from southern Germany and the stills of a nearby spirits producer. Initial funding came from family and friends, and when their bank balked at pumping in more cash for growth, Diageo Plc’s incubator stepped in, taking a 20 percent stake. On Thursday, the drinks giant said it will take full control of Belsazar, for an undisclosed price.
Wagner, speaking from home near Freiburg in southern Germany after signing the deal Wednesday in Berlin, said the two sides had been in talks for several months. Diageo saw an opening in the market for high-end vermouth, while Belsazar could benefit from the company’s global distribution network.
The deal is the latest example of a multinational distiller taking over a startup with a cult following: A true fan could mix a “German startup martini” with a splash of Belsazar atop a jigger of Monkey 47, a gin from the Black Forest that Pernod Ricard SA bought two years ago. And last summer, Diageo poured $1 billion into Casamigos, a tequila brand co-founded by actor George Clooney.
“It’s safe to say we didn’t sell for that amount,” said Wagner, who declined to give a purchase price. “But things will just continue as they are. Diageo has no intention of gutting a business they just bought.”
Danish Rye
Belsazar is the first company to be acquired by Diageo’s Distill Ventures unit. The fund has also invested in Seedlip, which makes high-end non-alcoholic beverages; a peated single malt rye whisky brand from Denmark called Stauning; and Starward, a whisky produced in Melbourne, Australia.
The vermouth market was flat at best when Belsazar was created, Wagner said. That dynamic has changed in recent years as consumers drink less but turn to more high-end products and seek out niche producers. Fevertree Drinks Plc, a maker of fancy tonics and ginger ales, is testament to that trend, with sales expanding rapidly and the stock one of the top performers in the U.K.
“Consumers have become a lot more conscious about where their meat, their strawberries, and indeed their liquor comes from these days,” Wagner said. “For us, selling to Diageo is just the next logical step, it’s not the end.”
In fact, Wagner said it’s simply the beginning -- so much so that he didn’t pop a bottle of champagne, or even vermouth, to celebrate the sale.
“I have two small kids and a self-employed wife,” Wagner said. “Today’s just another day at work for me.”
©2018 Bloomberg L.P.
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