Diageo has agreed to acquire Brazil-based Ypioca Agroindustrial’s cachaca brand Ypioca and some of the production assets for nearly £300m to expand its presence in Brazil.

The production assets to be taken over by Diageo include a distillery in Paraipaba, Ceara, a bottling plant in Fortaleza, Ceara, and a warehouse in Guarulhos, Sao Paulo.

Cachaca is a major spirits category in Brazil with net sales of approximately £60m, based on adjusted figures as of December 2011.

Diageo CEO Paul Walsh said Brazil is an attractive, fast growing market for the company with favorable demographics and increasing disposable incomes.

"The acquisition of Ypióca gives us the leading premium brand in the largest local spirits category," Walsh said.

"It will also provide Diageo with an enhanced platform from which to accelerate the long term growth of our premium international spirits brands in Brazil.

"This investment represents the continuation of our strategy to increase Diageo’s presence in the fastest growing economies of the world."

Ypioca Agroindustrial has an extensive sales and distribution network in the Northeast of Brazil and has huge retail presence throughout the nation.

Ypioca has 8% market share of the total cachaca category, with 6.6 million 9L cases.

Diageo has a huge collection of beverage alcohol brands across spirits, beer and wine including Johnnie Walker, Crown Royal, J&B, Windsor, Buchanan’s and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Baileys, Captain Morgan, Jose Cuervo, Tanqueray and Guinness.

Image: Cachaca is a sugar cane rum and is used to make Brazil’s national cocktail Caipirinha. Photo: FreeDigitalPhotos.net