Minnesota's Phillips Distilling acquires two new brands

Phillips Distilling Co. is making a rare acquisition as the relatively new chief executive of Minnesota's largest liquor producer continues to put his mark on the company.

Princeton, Minn.-based Phillips will add Kamora Coffee Liqueur and Leroux brandy and liqueurs to its portfolio in a deal expected to close Dec. 1. Phillips expects to bring production of the newly acquired cordials to Minnesota next year.

Chicago-based liquor giant Beam Suntory sold the brands for an undisclosed sum in a deal announced Monday.

"Adding Leroux and Kamora was an opportunity to build on the most valuable part of our business," Phillips CEO Andy England said in an interview. "Flavored liquor — that's kind of our core strength."

Founded in 1912, Phillips is known best for its own brands of vodka and schnapps as well as UV vodka, Prairie Organic vodka and gin and Revel Stoke flavored whiskeys. Earlier this year the company introduced the Cubist freezer vodka and refreshed its branding, which it will extend to its new brands after bringing production in-house.

"Kamora looks tired, but makes a damn good white Russian," England said. "Frankly, there has been no innovation on these brands for years, and we can make them more relevant."

Liquor store sales soared during the pandemic, and spirits in particular have been on the rise, with increased interest in cocktails and mixology.

While American-made cordials have seen little growth in recent years, according to the Distilled Spirits Council of the U.S., overall the category has grown on the strength of foreign brands like Bailey's Irish Cream and Aperol.

Demand for cordials and liqueurs rose 3% in 2019 and 2% last year, according to IWSR Drinks Market Analysis. Sale volumes are expected to continue growing about 1% annually through 2025.

"The continued at-home mixology trend has given rise to cordials and liqueurs, which are often used as ingredients in popular cocktails," Brandy Rand, IWSR's chief operations officer for the Americas, said in a statement. "This was accelerated during COVID, in addition to an increase in brands that offered consumers comfort cues, indulgent dessert liqueurs, for example."

England, who joined Phillips in August 2020 and previously worked as chief marketing officer at MillerCoors, said the owner and board members of the privately held company have, so far, been supportive of his strong interest in acquisitions.

"The last nine, 12 months I've been telling people we're acquisitive," he said. "Now I think they finally believe me."