Heaven Hill Expands Into Canada with $266 Million Black Velvet Acquisition

August 13, 2019 – Heaven Hill Brands has agreed to acquire Black Velvet, the #2 selling Canadian Whisky brand, from Constellation Brands. The deal was valued by Constellation at $266 million (USD) in cash, and includes the Black Velvet Distillery in Lethbridge, Alberta along with its existing stocks of maturing whisky and several smaller Canadian Whisky brands. The transaction is expected to close this autumn following regulatory review by the Alberta Liquor and Gaming Commission, which must approve the transfer of the distillery’s operating permits.

“Black Velvet is a historic brand, one that we’re excited about because it fits our portfolio of whisky brands and frankly, non-whisky brands that are of unique scale and at a price point that we’re very good at selling,” said Heaven Hill spokesman Josh Hafer. Black Velvet’s three expressions sell approximately 2 million cases annually, primarily in the United States. “If you look at, notably, Evan Williams, Christian Brothers Brandy, Admiral Nelson’s Rum…these are brands of large volume that fit with what we’re trying to do as a company and can help us grow brands like Elijah Craig, Pikesville, Lunazul Tequila, and those types of brands that are smaller in scale but growing at a rapid pace,” Hafer said.

The acquisition is not Heaven Hill’s first foray into Canadian Whisky, but it will be the first time the privately-held company has acquired a distillery outside the United States. Carolans Irish Cream liqueur is produced in Ireland under a supply contract, and until now, Heaven Hill’s only distillery outside of Kentucky has been the Deep Eddy Vodka distillery in Austin, Texas.

The deal received praise from longtime Canadian Whisky writer Davin de Kergommeaux, the author of “Canadian Whisky: The New Portable Expert” and editor of CanadianWhisky.org. “This is good for Black Velvet as it was withering under Constellation, where the emphasis had switched to the wine portfolio,” he said in an email. “It is also good for Canadian Whisky as Black Velvet is an important brand with lots of potential for premiumization, and Heaven Hill has a reputation for investing in brands and building them,” de Kergommeaux said. In 2018, de Kergommeaux honored Black Velvet master blender Vicky Miller with a lifetime achievement award in the Canadian Whisky Awards for her contributions to the industry.

Constellation Brands has been known primarily as an acquirer of whisky brands and distilleries in recent years, mostly in the craft distilling space as it re-focuses on premium spirits brands along with beer and wine. In a news release, Constellation CEO Bill Newlands said “this decision aligns with our consumer-led premiumization strategy to deliver accelerated growth and shareholder value as we continue to focus our wine and spirits portfolio on higher-end, fast-growing brands. For Heaven Hill, Black Velvet is a historic, well-known, and high-volume brand that complements their broad distilled spirits portfolio and aligns with their business strategy.”

The Constellation spirits strategy has also focused on craft distilling in recent years. In May, it acquired a majority stake in Nelson’s Green Brier Distillery in Tennessee to go along with High West Distillery in Utah. The company also has minority stakes in Catoctin Creek Distilling, Bardstown Bourbon Company, and Montanya Distillers.

The transaction marks Constellation’s departure from the Canadian Whisky market. It acquired Black Velvet in 1999 from Diageo, two years after Grand Metropolitan and Guinness merged to form the drinks giant. The brand was created by Heublein in 1951 and originally distilled at the Schenley distillery in Valleyfield, Quebec. In 1973, production moved to the newly-constructed Palliser Distillery in Lethbridge, Alberta.

In 2009, Constellation moved production of Schenley’s Golden Wedding, OFC (not to be confused with the O.F.C. Kentucky whiskies from Buffalo Trace), and other former Schenley brands to Lethbridge. Those “heritage” brands are also part of the Heaven Hill transaction. The distillery has around 60 employees, and according to Hafer, no jobs will be affected after the transaction is completed.

This is the second distillery transaction announced so far during August. Last week, Pernod Ricard acquired the assets of Fort Worth, Texas-based Firestone & Robertson Distilling Company as CEO Alexandre Ricard continues to revive the company’s American Whiskey portfolio. In June, Ricard completed the acquisition of a majority stake in Rabbit Hole Distilling, marking Pernod Ricard’s return to Kentucky Bourbon a decade after it sold Wild Turkey to Gruppo Campari for $575 million.

Editor’s note: Heaven Hill Distillery is a sponsor of WhiskyCast. 

Links: Black Velvet | Heaven Hill | Constellation Brands