DRINKS firm Diageo has unveiled a £300m deal that will see it acquire a leading brand of Brazil’s national drink.

Cachaca, which is made from sugar cane, has its roots as a working man’s drink but is now increasingly popular with middle-class consumers, particularly in the cocktail caipirinha.

The deal with Ypioca gives Diageo the second-biggest cachaca brand by revenue and the third biggest by volume, with net sales of about £60m in 2011.

The acquisition of the so-called “Brazilian rum” marks an expansion in Diageo’s Latin American business, which already sells Venezuelan dark rums Cacique and Pampero and distributes Mexico’s leading tequila brand Jose Cuervo.

Chief executive Paul Walsh said: “Brazil is an attractive, fast growing market with favourable demographics and increasing disposable incomes.

“This acquisition gives us the leading premium brand in the largest local spirits category.

“It will also provide Diageo with an enhanced platform from which to accelerate the long term growth of our premium international spirits brands in Brazil.”

Diageo reported 23% net sales growth in Latin America in its half year results to December, 2011, the greatest jump across all regions worldwide.

The acquisition will more than double the Brazilian business for Diageo, whose current cachaca offering comprises only the small Nega Fulo brand.

Ypioca is popular among Brazil’s burgeoning middle class which is expected to make up 57% of the population by 2014, said Diageo Latin America and Caribbean president Randy Millian.

Diageo is the world's leading premium drinks business with a wide range of beverage alcohol brands across spirits, beer and wine.

Its brands include Johnnie Walker, Crown Royal, JeB, Windsor, Buchanan’s and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Baileys, Captain Morgan, Jose Cuervo, Tanqueray and Guinness.

Its products are sold in more than 180 countries around the world.

The company is listed on both the New York Stock Exchange and the London Stock Exchange.

Ypioca is a leading premium cachaca brand in Brazil, with more than 160 years of heritage. Diageo’s acquisition of the Ypioca brand will include a distillery, bottling plant and warehousing. Ypioca has an 8% share of the total cachaca market at 6.6m nine-litre cases.

Diageo shares closed flat at 1513p.