American actor Ryan Reynolds is working on a $610 million deal with Diageo (OTC: DGEAF) to sell his 'Aviation American Gin company. Reynolds became the owner of Aviation two years ago and will retain an ongoing ownership of the gin as Diageo manages the spirit itself.
Diageo is an alcohol giant that owns other spirits like 'Johnnie Walker Whiskey' and 'Smirnoff,' along with other high-end gin names like 'Tanqueray' and 'Gordon's'. The initial payment deal for 'Aviation' is a cool $335 million, with a potential $275 million in sales of 'Aviation American Gin' over a 10-year period.
Background
This also isn't Diageo's first time buying out a celebrity's alcohol brand. The brand has also bought a super-premium tequila brand 'Casamingos' for $1 billion in 2017, which was co-founded by American actor George Clooney. Going back further, the company also teamed up with music artist Sean "Diddy" Combs to sell 'Ciroc' vodka in 2007.
Luckily for Diageo, the pandemic doesn't seem to be hitting premium alcohol sales too hard. While global bars, clubs and restaurants have seen closures or reduced capacities, alcohol has still been selling well throughout the pandemic as super-premium gin, along with other spirits, has seen growth throughout the country. The publication The Drinks Business noted in 2019 that over 400 new gins have made their way to market since 2016.
Looking Forward
With this uptick in gin interest and 'Aviation American Gin' retailing $27 per 750 milliliter bottle, the deal between Diageo and Reynolds couldn't have come at a better time for the alcohol giant. Reynolds seemed to generate real interest in the gin after he saw a controversial Peloton (NASDAQ: PTON) commercial and the criticized negative body images and unhealthy marriage dynamics in it. He made his own ad for 'Aviation American Gin', featuring the same actress, Monica Ruiz, being consoled at a bar and of course, being served his gin. The commercial made digs at the Peloton ad and Reynolds tweeted his commercial with "Exercise bike not included." This move, coupled with 'Aviation American Gin's' previous popularity, is likely what lead it to being the second-most popular super-premium gin in the U.S.