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Diageo has acquired US flavoured tequila brand 21Seeds to boost its portfolio of high growth brands.

21Seeds was founded in 2019 by three female entrepreneurs, Kat Hantas, Nicole Emanuel and Sarika Singh, who will continue to actively work on 21Seeds, collaborating closely with the Diageo North America team and helping to build further on the brand’s success.

21Seeds is a fast-growing flavoured tequila infused with the juice of real fruits, available in three varieties: Valencia Orange, Grapefruit Hibiscus and Cucumber Jalapeño.

Diageo said the brand has successfully tapped into a variety of consumer trends such as flavoured tequila, simple at-home cocktails, and an interest in quality premium spirits.

With an ABV of 35%, it said each variant can be mixed into easy-to-make, spritz-style cocktails such as the brand’s signature serve, the ‘Seed and Soda’.

In the United States, the tequila category is growing at 16%: more than three times as fast as total spirits. Within the category, the small but emerging flavoured tequila segment grew over 20% from 2019 to 2020, with super-premium flavoured tequila growing 65% over the same period.

Debra Crew, President, North America, commented: “21Seeds is one of the fastest-growing brands in the increasingly popular flavoured tequila segment and we are delighted to welcome it into our tequila portfolio. This acquisition is in line with our strategy to acquire high growth brands in fast growing categories. It is particularly special to me given Diageo’s longstanding commitment to champion inclusion and diversity, and we look forward to working with this dynamic trio of female entrepreneurs to continue growing 21Seeds.”

Kat Hantas, Co-founder, 21Seeds, added: “We created 21Seeds because, quite simply, it’s what we wanted to drink - something casual that made drinking tequila cocktails as approachable as a glass of wine or beer. It’s been a thrill to watch consumers embrace our brand, and we are excited about the future for 21Seeds with Diageo’s resources and capabilities behind it.”

The acquisition has been funded through existing cash resources.

Morning update

Boots, currently put up for sale by owner Walgreens, posted comparable retail sales growth of 22% in the second quarter, with market share gains across all categories, led by beauty.

Footfall improved compared to year-ago quarter, though traffic was still below pre-COVID-19 levels, with restrictions to combat the Omicron surge in place for most of the quarter.

Boots.com continued to perform well, with digital sales in the second quarter up 60% compared to pre-COVID-19 levels in the second quarter of fiscal 2020. Boots.com accounted for over 15% of retail sales in the quarter, compared to pre-COVID-19 levels of 9%.

Boots saw pharmacy sales growth of 3.6% in the second quarter, reflecting stronger demand for pharmacy services.

Gross profit increased 11.8% compared to the same quarter a year ago, including an adverse currency impact of 3.4%. Adjusted gross profit increased 15.2% on a constant currency basis, reflecting strong UK growth, notably from higher retail store transactions.

Costs in the quarter increased 6.2% from the year-ago quarter to $1bn, including a favourable currency impact of 2.9%, reflecting increased investments in labor, marketing and IT compared to the year-ago quarter.

Operating income grew 62.8%, including an adverse currency impact of 7.4%, to $173m, while adjusted operating income grew to $226 million, an increase of 60.7%.

Walgreens said its strategic review of the Boots business remained in progress and was “in line with the company’s renewed priorities and strategic direction, including greater focus on US healthcare”.

On the markets this morning, the FTSE 100 is up 0.3% to 7,537.1pts.

Risers include Just Eat Takeaway.com, up 2.3% to 2,654.5p, Unilever, up 1.6% to 3,511.5p and Bakkavor, up 1.6% to 114.2p.

Fallers include Parsley Box, down 4.8% to 20p and Compass Group, down 1.8% to 1,620p.

Yesterday in the City

The FTSE 100 ended the final day of March down 0.8% to 7,515.6pts on concerns over Russia’s threat to Europe’s gas supply.

The day’s fallers included Deliveroo, down 6.1% to 112.7p, SSP Group, down 5.6% to 227.2p, Just Eat Takeaway.com, down 4.8% to 2,594.5p, THG, down 4.2% to 92p, Associated British Foods, down 4% to 1,662p, Marks & Spencer, down 3.4% to 154.7p and Sainsbury’s, down 3.3% to 252.7p.

The day’s few risers included Tate & Lyle, which was up 1.8% to 732.2p after striking an an agreement to acquire Quantum Hi-Tech (Guangdong) Biological Co, a prebiotic dietary fibre business in China for US$237m (£180m).

Other risers included Nichols, up 2.8% to 1,370p, Bakkavor, up 2.2% to 112.4p, Tate & Lyle, up 1.8% to 732.2p, AG Barr, up 0.9% to 535p, Coca-Cola Europacific Partners, up 0.9% to €44.33 and FeverTree, up 0.8% to 1,791p.

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