Diageo this week announced its acquisition of Mr Black Spirits, the Australian creator of the global market leader in premium coffee liqueur.
Mr Black was launched in 2013 by designer Tom Baker (pictured) and award-winning distiller, Philip Moore, with the vision of bringing coffee culture to the world of spirits and cocktails.
It has since grown rapidly to become the leading premium-priced coffee liqueur in the United States, and is now available in 22 countries worldwide.
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Diageo Australia managing director Angus McPherson said Mr Black’s success demonstrates the potential of Australian spirits as an export category.
“Not only have we seen Australian distilleries grow from just 28 to more than 400 since 2014, but we’re also seeing Australian spirits brands receive widespread international acclaim and expansion of Australian spirits in overseas markets,” he said.
“It’s wonderful to see Mr Black become part of Diageo’s incredible line up of the world’s best spirits alongside another Australian icon, Bundaberg Rum.”
Longstanding partners: Diageo and Mr Black
It likely came as news to both drinkers and the trade that Diageo has been a minority shareholder in Mr Black Spirits since the very early days.
“After several years with them as a supporter, we are thrilled to be joining the Diageo family,” founder Tom Baker revealed this week.
ASIC records suggest Distill Ventures bought into the company in August 2015, shortly before its December 2015 investment in Starward Whisky.
But in contrast to the widely publicised Starward deal – and that of America’s Westward Whiskey three years later – Mr Black took on its new shareholder surreptitiously.
The only way anyone could have known about the relationship is by combing Diageo’s financial records.
Following the initial disclosure of a 10.03 per cent stake in its 2015 Annual Report, Diageo increased its shareholding to 20 per cent in 2017.
Then in 2020, as Mr Black wrestled with the pandemic’s impact in the US, records show the Diageo shareholding rose to 45 per cent.
Baker nevertheless maintained a policy of non-disclosure during a half-hour podcast interview with Drinks Adventures in February 2021.
“It was just tragic to watch everything we’d worked for disappear overnight in March [2020],” he said.
“The team just hustled and we turned from being a really bar-focused brand, to one that had no choice but to win in retail.”
Founders choose blackout or transparency: Diageo
Distill Ventures says it is up to company founders to choose “whether our partnership is public or not”.
Having both already gone public, Starward’s David Vitale (S1E4) and Westward Whiskey’s Thomas Mooney (S4E5) emphasised the obvious advantages of having Diageo as a partner in their respective interviews on the Drinks Adventures podcast.
But this transparency is the exception rather than the rule, with the vast majority of Distill Ventures companies apparently preferring to keep their customers in the dark.
The Mr Black deal highlights that drinkers might not know who is really behind their favourite local craft products, unless they go to extreme lengths to find out.
This is especially so if founders actively maintain the appearance of a scrappy, bootstrapped operation even while receiving capital injections from a multinational backer.
“We need to move out of our current distillery. It’s vastly too small for our requirements,” Baker told Drinks Adventures last year.
“When you’re a start-up, it’s not a matter of choice… we just have finite resources.”
Mr Black is the fourth company to graduate from the Distill Ventures program and the first Australian brand to do so.
“Tom Baker will remain actively involved with the brand, working with the Diageo team to build on Mr Black’s success,” the company said.
Diageo Australia declined requests for interviews with Drinks Adventures.
More:
How Mr Black Spirits overhauled coffee cocktails: S8E5
Philip Moore, Gin Magazine Hall of Fame Inductee: S13E8
Starward’s cult whisky, Ginger Beer Cask, with David Vitale: S13E3
