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A week ago, spirit conglomerate Diageo (DEO) agreed to buy a majority stake in United Spirits, India's largest spirit company. Diageo said it would end up with 53.4% in United Spirits for a price tag of $2.1 billion or 20x trailing EBITDA. This transaction continues the trend that began in the 1990's of the consolidation of the spirit industry. With the major spirit conglomerates largely using the "acquire to grow" business philosophy, more transactions are expected. Notably, Diageo is thirsty for more deals and already is in talks to buy leading tequila maker Jose Cuervo. Brown-Forman (BF.B) is also on the prowl, ready to dip into its war chest to fund a whiskey or vodka acquisition. The question now becomes who's next.

Beam's (BEAM) brands include Jim Beam Bourbon, Maker's Mark Bourbon, Sauza Tequila, Pinnacle Vodka, Canadian Club Whisky, Courvoisier Cognac, Teacher's Scotch Whisky, Cruzan Rum, Hornitos Tequila, Knob Creek Bourbon, Laphroaig Scotch Whisky, Kilbeggan Irish Whiskey, EFFEN Vodka, Pucker Flavored Vodka, Larios Gin, Whisky DYC, DeKuyper Cordials, and Skinnygirl Cocktails. Beam is focused on delivering superior performance with its unique combination of scale with agility and a strategy of Creating Famous Brands, Building Winning Markets and Fueling Our Growth. Beam generated 2011 sales of $2.8 billion, volume of 34 million 9-liter cases and some of the industry's fastest growing innovations.

Beam has been widely mentioned as an M&A target ever since the breakup of Fortune Brands last year. In a story last year just after the break up, Street analysts said that with bourbon sales outpacing vodka in the U.S. as drinking at home increases, Beam's command of a third of the domestic market with Jim Beam and Maker's Mark may lure Pernod or Diageo said Davenport and Goldman Sachs. Separately, an analyst noted that Beam has "a very strong position in the U.S., which is the most profitable market, so it would be a very nice addition to one of the other global players."

In a story earlier this year in a U.K. paper, there were rumors of a bid for Beam in the works in the $90/share range. Broker Liberum Capital said that Beam would be a good fit as Diageo is under exposed to brown spirits in the US. Furthermore, a multi-billion pound break-up bid for Beam could possibly be boss Paul Walsh's swansong, Liberum Capital noted.

Panache Beverage (OTCPK:WDKA) is a smaller company that's business model that fits the consolidation trend of the major spirit players. WDKA's business model is to "build and exit" as the company already has demonstrated in its 2006 sale of its 42 BELOW vodka brand to Bacardi for $91 million. The company's expertise lies in the strategic development and aggressive early growth of its brands establishing its assets as viable and attractive acquisition candidates for the major global spirits companies. Panache's existing portfolio contains three brands: Wodka Vodka, Alchemia Infused Vodka and Alibi American Whiskey.

Zacks covers the stock and has a price target of $2.75 on the shares, plenty of upside from today's prices. In the report, Zachs is bullish on the company's three brands and says "Panache remains well positioned to achieve solid revenue growth and operating leverage as it builds its portfolio of successful brands to eventually sell to the big players in the acquire to grow spirits arena."

The company's most recent news centers are the expansion of distribution for its spirit brands. On May 9, Panache announced a deal to enter Canada with Wodka Vodka and Alchemia Infused Vodka. On June 28, Panache announced that Wodka Vodka entered into a major distribution deal in Australia. On July 30, Panache announced a Wodka Vodka distribution deal into the state of Nevada. The growth rates for Panache have been impressive. In its last reported quarterly results, Panache reported revenue growth of nearly 70% y/y.

Molson Coors Brewing Company (TAP) is one of the world's largest brewers. The company's operating segments include Canada, the United States, Central Europe, the United Kingdom, and Molson Coors International. The company has a diverse portfolio of owned and partner brands, including signature brands Coors Light, Molson Canadian, Staropramen and Carling.

The company has struggled and analysts weren't too pleased with TAP's acquisition of StarBev earlier this year for €2.65 billion ($3.54 billion). The purchase price represented a multiple of approximately 11x EBITDA. That fact, combined with the sluggish stock price, may provide an opportunity for a competitor to come in and make a bid. In fact, the stock was recently mentioned as a takeover candidate. The mean analyst target calls for upside of over 15% in the shares.

SABMiller (OTCPK:SBMRY) is one of the world's leading brewers with more than 200 beer brands and some 70,000 employees in over 75 countries. The group's portfolio includes global brands such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch; as well as leading local brands such as Aguila (Colombia), Castle (South Africa), Miller Lite (USA), Snow (China), Victoria Bitter (Australia) and Tyskie (Poland). SABMiller also has growing soft drinks businesses and is one of the world's largest bottlers of Coca-Cola (KO) products.

The company has seen plenty of action in M&A news and rumors. Late last year, after some opposition, the company finally completed a takeover of Foster's, Australia's biggest brewer, for $10.2 billion. Just a few months after completing the Foster's acquisition, SABMiller was reported to become an M&A target. It was reported that AB InBev (BUD) may be looking to buy the company. Previously, SABMiller was touted by Goldman Sachs as a potential takeover target by Anheuser-Busch InBev given its emerging markets exposure and the long-term growth opportunities, particularly in Asia and Africa. The CEO of SABMiller has publicly stated that he is not against the idea.

Source: Diageo's $2.1 Billion Deal Signals More Consolidation On The Way