Diageo bets on rum with £390m Don Papa deal

Diageo is betting that rum will become the next tequila as drinkers continue to reach for high-end spirits.

The drinks company has announced the takeover of Filipino rum brand Don Papa in a deal worth up to €437.5m (£387m).

The FTSE 100 company said the deal will help it take advantage of the “early stages of premiumisation” of rum.

Sales of top-shelf rums grew by 18pc between 2016 and 2021 in Europe and 21pc in the US, Diageo said. Don Papa outperformed the market over the same period, growing 29pc.

Bottles of Don Papa, which is aged for seven years in oak barrels, sell for around £30. Diageo has already done well from its bet that tequila would become a premium spirit.