The Business of Booze 2

Business Week had an interesting article recently about the legal battle over control of the premium tequila, Patrón. What struck me about this article were the personalities involved and how the outcome of this legal fight impacts real people not just the bottom lines of huge conglomerates.

Patron TequilaHere’s the quick version:

Two buddies, John Paul (the guy with the pony tail from the Paul Mitchell hair care ads) and Martin, are unable to find a decent tequila for margaritas. They find a small distillery in Mexico with a tequila they like, license the tequila to sell it in the United States and name it Patrón. In the 1990s, as the company begins to grow, John Paul and Martin set up an agreement to buy the other one out if something were to happen. Fast forward to 2002, Patrón is one of the hottest brands in the market and the corporate structure is changed to better suit the growth of the company, but John Paul and Martin forget to update the buy/sell agreement. In 2003, Martin dies. He does not have a wife or kids, so he leaves his estate to a trust to help educate children in developing countries. The trust decides to sell their share of Patrón to Bacardi for $175 million, a steal considering the brand is now reportedly worth over $1 billion. John Paul offers the trust $755 million for the share of Patrón. This makes me think the brand is worth much more than the reported $1 billion. The trust backs out of the deal with Bacardi stating they need to do what is best for the children.

Summary – Everyone’s in court now and it’s getting ugly. Bacardi’s suing because they thought they had a deal at $175 million. John Paul’s in court because about to lose a pile of cash because he didn’t update his paperwork and a trust is going to get a significant amount of money to educate poor children all over the world…just because two guys wanted better margaritas.

[techtags: TAQUILA, PATRÓN]

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