When the home market stops growing, M&A kicks in: what Gallo, Sazerac and the big European houses are saying with their acquisitions

In little more than a year, Gallo has paid 775 million dollars for a bourbon, Sazerac has taken equity in two tequila brands and bought a vodka, Tito's has made the first acquisition in its history, and Pernod Ricard and Brown-Forman have sat down to talk about a merger. All of this has happened on top of a US market that fell 5% in volume in 2025. It is neither coincidence nor appetite: it is what companies do when organic growth runs out in the market that sustained them.

The United States is no longer growing; it is being divided up

For two decades, the industry's growth was explained with a single word, premiumization, and a single market, the United States. In 2025 that engine stopped. According to IWSR, beverage alcohol consumption in the United States fell 5% in volume and 4% in value, with declines in 49 of the 50 states. Spirits suppliers billed 36.4 billion dollars, 2.2% less than the year before, and even tequila, the star category of the decade, lost value. The only thing that grew was RTDs.

The underlying reading matters more than the figure. When a market stops growing, the companies that depend on it discover that their earlier growth was not entirely their own merit: it was the current. And when the tide goes out, only three ways to grow remain: take share from someone else, leave the home market to diversify and build demand elsewhere, or buy what is still growing. The first is slow, expensive and decided at the point of sale. The second is a long-distance race, where creating demand that does not yet exist and speaking to a new consumer from scratch can consume a great deal of time and resources. The third is the most direct, and it is decided in a private contract between two parties.

M&A kicks in, and it follows a pattern

The deals of recent months are not isolated moves. They respond to three logics that keep repeating.

Buying the categories that still grow. Sazerac has invested in 818 Tequila and SipMargs and taken over their exclusive US distribution; Tito's has bought Lalo Tequila; Diageo has taken a stake in Lobos 1707 in exchange for the North American rights to Cîroc; Molson Coors has bought its way into Fever-Tree's US operation, with 8.5% of the equity and exclusive production, sales and distribution of its mixers in the country; and Spirit of Gallo has added Four Roses and Gran Malo to its portfolio. Agave and ready-to-drink cocktails are the two categories with real growth in the United States, and the big houses prefer to buy them rather than build them from scratch.

Buying heritage and scale. Four Roses is not a growth bet: it is a century-old bourbon with its own distillery. Gallo bought it from Kirin for 775 million dollars to gain global presence in premium spirits. And moves like the one Pernod Ricard and Brown-Forman explored are natural: in a market that is not growing, size is bought.

Pruning in order to buy. Campari has sold Cinzano to Caffo and Averna to Disaronno Group, confirming its strategy of "fewer, bigger bets." Constellation has sold Svedka to Sazerac and a large part of its wine portfolio. M&A is not only about buying: it is about deciding which brands and which markets to exit in order to fund where you enter.

One figure qualifies all of the above. According to Capstone Partners, the number of deals in the beverage sector fell 18% in 2025. Less is being bought, but with more intent, and the consolidation Capstone expects for 2026 is in distribution, not only in brands. Whoever sells today sells to fewer buyers, who are more selective and better informed.

The Europeans have already made that journey in Mexico

For a European company looking at Mexico, the question is not whether the format works. It already did, at the largest scale possible. Heineken bought FEMSA's brewer in 2010 for 7.7 billion dollars. AB InBev completed the acquisition of Grupo Modelo in 2012, paying 20.1 billion for the 49% it did not own. Today the two European groups control the vast majority of Mexican beer, which is in turn the world's largest beer exporter.

In spirits the pattern is more recent and more instructive. Campari took control of Ancho Reyes and Montelobos in 2019. Pernod Ricard bought a majority of Código 1530 in 2022. And Diageo acquired Casa UM, the company behind Mezcal Unión, in 2021, after five years as its distributor. That sequence, distribution first, a stake next, control at the end, is the most repeated in the industry, and the most sensible: the commercial alliance is the due-diligence period of the acquisition. You get to know the team, you see the real numbers, you test the rotation, and only then do you set the price.

Why Mexico and Latin America now enter the equation

It is worth being precise, because the easy argument is false. Mexico and Latin America are not attractive today because they are growing: the Mexican wine and spirits market is in adjustment and Brazil fell 4% in 2025. They are attractive for three different reasons.

The first is origin. The two categories growing in the United States, agave and agave-based ready-to-drink cocktails, are produced in Mexico. Whoever wants to secure supply, brand and margin in those categories has to be in the country, and the shortest path is to buy or partner with someone who is already there.

The second is position. A market in redistribution punishes brands without a reason to exist, but rewards those who enter with structure while others retreat. Assets, distributors, local brands and import licenses are worth less when their owner is short of cash, and in Mexico, after two years of inventory and price adjustment, in our experience there are more owners short of cash than three years ago.

The third is real diversification. A European company with 70% of its sales in its home country and the rest in the United States is not diversified: it is exposed to two markets that have stopped growing at the same time. One market of operation, or a pair, is not diversification when growth stalls in both at once.

What to learn from all this

M&A is not an event; it is a format that gets activated. When the home market stops growing, the big houses do not wait: they buy categories, they buy scale, and they sell what does not fit. A mid-sized brand that does not have that format ready, with clear criteria on what it would buy, whom it would partner with and what it would sell, is going to get a call from someone who does. And it will get that call at the worst possible moment.

The alliance is the due diligence of the acquisition. Diageo distributed Mezcal Unión for five years before buying it. Sazerac enters 818 with capital and distribution at the same time. A well-designed partnership is not the alternative to an acquisition: it is its first phase, and whoever structures it that way from the start later negotiates with information, not with hope.

Evaluating with time gives an advantage that necessity destroys. A company that analyzes its international development with two years of runway can choose market, partner, structure and price. The one that does it when cash gets tight chooses among what is available, at the price it is offered, with no time for real development. The difference between the two is not the quality of the brand: it is when they started looking.

For a wine or spirits brand that today depends on one or two markets, the question is no longer whether M&A affects it. It is which side of the table it wants to sit on when it arrives, and how much time it has left to prepare.