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The Globe and Mail

Sale to Italy’s Campari puts Canadian whisky maker closer to global goal

Italian drinks group Campari is paying $186-million to buy Grimsby, Ont., whisky company Forty Creek Distillery.

sheryl nadler The Globe and Mail

After building one of Canada's most successful independent whisky distilleries over the past two decades, John Hall has cashed in with the $186-million sale of his Forty Creek Distillery Ltd. to Italian booze giant Gruppo Campari.

Campari said Wednesday it is buying the small distiller based in Grimsby, Ont., about 80 kilometres from Toronto, in an all-cash deal.

But Mr. Hall, who built Forty Creek into a significant player with sales approaching $40-million a year, is staying on as chairman and whisky maker. He'll help guide Campari in its attempts to take advantage of the revival of the "brown spirits" market in the United States, and the worldwide growth in premium whisky sales.

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"My dream was to have Forty Creek go global," Mr. Hall said in an interview Wednesday. "I couldn't do it by myself as an independent, but with a partner like Campari, I know it is going to happen."

Forty Creek's handful of artisanal whiskies – it is the fastest growing whisky brand in Canada – are now available only in North America. With Campari's investment and resources, distribution will broaden in the United States and begin to get a foothold elsewhere, Mr. Hall said, while the company will maintain its Ontario plant and employees.

Mr. Hall began in the wine business in the 1970s, starting a distillery in 1992. Last year, he sold his Kittling Ridge winery to Magnotta Winery Estates, but held on to the Forty Creek distillery. He said he will be happy to hand over distribution and administration work to Campari, giving him "more time to work with the whiskies." He said selling was a "strategic decision" and he has given no thought to what he will do with the money.

Campari is one of the biggest worldwide liquor companies, with brands such as the aperitif Campari, Cinzano wines, Skyy vodka and Wild Turkey bourbon.

The Italian giant sees a great future for Canadian whisky, CEO Bob Kunze-Concewitz said on a conference call. This purchase gives the company a much-desired foothold at the high end of a growing market, particularly in the United States, he said.

At the moment, just 20 per cent of Forty Creek's sales are in the United States. But the U.S. accounts for three quarters of all Canadian whisky sales, so there is huge potential for expansion, Mr. Kunze-Concewitz said. In addition, Canadian whisky could show considerable growth on the global stage in the mid- to long-term.

The Forty Creek operation will form the base of a new Canadian distribution organization for Campari, which does not have one at the moment, said Mr. Kunze-Concewitz, who described Forty Creek as a "hidden gem of a brand." He promised that Forty Creek will continue to use its handcrafted production methods.

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Mr. Hall should get much of the credit for the resurgence in Canadian whisky after decades of decline, said Ottawa-based whisky writer Davin De Kergommeaux. In addition to championing Canadian whisky in this country, Mr. Hall also "effectively became the face of Canadian whisky in the U.S.," by personally promoting his products south of the border, often selling them from bar to bar, he said.

The purchase of Forty Creek by Campari is a "huge endorsement for Canadian whisky in general and a huge endorsement of what John Hall has been doing," Mr. De Kergommeaux said. The deal will be particularly valuable as Campari takes over the corporate and distribution headaches, allowing Mr. Hall to get back to his creative roots in developing the whisky products, he said.

In recent years, several other Canadian liquor operations have been bought out by bigger players. Control of Corby Distilleries Ltd. was acquired by British giant Allied-Lyons PLC in the 1980s (it is now part of the French-based Pernot Ricard S.A.). In 2006, Fairport, N.Y.-based Constellation Brands Inc. bought Vincor International Inc., which owned the respected wine brands Jackson Triggs and Inniskillin. And all the big Canadian beer companies are now part of multinational conglomerates.

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