When we talk about celebrity brands, it seems like “a billion” is the new benchmark. Back in 2014 I wrote about The Honest Company’s billion dollar evaluation; in 2016, the company was reportedly in talks with Unilever, but that fell through. Unilever acquired Seventh Generation over The Honest Company, reportedly because of the latter’s aggressive evaluation. This spring, the CEO of Honest was replaced (the new CEO is from Clorox’s Burt’s Bees brand). “Billion” is also floated around a lot when it comes to Jessica Simpson - she’s probably closer to the mark because of licensing and 30+ product lines but selling a billion is not the same as making a billion.
The issue with rushing to these numbers is that they get picked up in every headline but are very rarely accurate. Take for example the story about George Clooney and Rande Gerber’s Casamigos and its billion dollar acquisition. (There’s a third partner, Mike Meldman. Poor Mike, the non-famous one who doesn’t get in on any of the fun Instagram shots.) The company has been sold for a hefty chunk of change to Diageo PLC (an international booze conglomerate) and the Big Number is making headlines. The deal breakdown isn’t quite so simple though, with $700 million at closing (reportedly in the “second half of 2017”) and an additional $300 million paid out over 10-years based on sales performance.
Considering it’s a young label (4 years old) that was literally founded with the ethos of “let’s make some tequila for our friends to drink,” it’s a puzzling evaluation. Diageo said that the company is growing rapidly, making it hard to pinpoint a value. (This is a common issue, which is why craft beer acquisitions are bonkers right now and many have speculated that there’s a bit of a dot-com bubble when it comes to alcohol brands.) Per this Bloomberg report, I’m not the only wondering about where they got that number; an analyst surmised that it is indeed a high price that is heavily dependent on the growth of the brand.
Diageo is betting big on Casamigos, which is interesting because it’s actually quite a typical celebrity brand, as far as marketing goes. We know the story – it started as a hobby between friends, an inside joke that goes back to their adjacent homes in Mexico. Then it turned into a passion for quality, and that passion for quality led to… a billion dollars on the doorstep.
Of course much more went into it than that (licensing, distribution, manufacturing, branding, marketing, advertising, strategic partnerships, sales), but Casamigos has been riding on the upper middle class beach bum image for four years. (Not to be confused with rich – rich is champagne and yachts, Casamigos has always been more bonfire and margaritas.) George has been highly visible on social media, traveling the world in his branded T-shirts, posing with the twin onesies and attending parties in Europe, but it’s all been packaged as palling around with BFFs Rande and Cindy (and invisible Mike).
Per Forbes, Casamigos was actively looking for a buyer (in the $500 million range) – so they got that and then some. If the company is exploding, why sell? Is it that they wanted to off-load the distribution and sales to expedite growth? Had they hit a wall with their manufacturer? Were they acquiring too much debt in trying to expand the business? Was it simply a side gig that become too cumbersome to manage and a distraction for George, Rande and Mike, who all have successful careers? It could be any combination of things.
By letting go of ownership, Clooney frees up not just some cash, but also his ties to owning a company which may be better optics if, as has been speculated for years, he wants to run for office. And this is a very public slap on the back for him, making a “billion” built on fun, not screwing anyone over or selling his soul. Not many corporations can say that.
Now he has a few options: keep it business as usual with T-shirts and social media; treat it like a polished and detached endorsement (like Nespresso); or slowly remove himself from a leadership role (and possibly leave millions on the table). Or maybe this is the Clooney retirement plan and he will double down and become a mocktress, throwing lunches at the Chateau Marmont and designing a Casamigos t-shirt line with J.Crew. If he shows up on Ellen making blood orange margaritas, we’ll know which way he’s gone.