Core Viewpoint - Diageo PLC reported a decline in earnings and announced a significant dividend cut as part of a strategic reset under new CEO Sir Dave Lewis to enhance financial flexibility and support investments in competitiveness and portfolio growth [1][3]. Financial Performance - Adjusted basic earnings per share for the half-year ended December 31, 2025, were 95.3 cents, down 2.5% year-over-year [1]. - Net sales reached $10.46 billion, reflecting a 4.0% decline on a reported basis and a 2.8% decline organically [1]. - Organic operating profit declined 2.8% to approximately $3.256 billion, consistent with sales trends [2]. Dividend and Guidance - The interim dividend was halved to 20 cents per share from 40.5 cents, reflecting a revised payout policy targeting 30-50% of earnings [1]. - Diageo updated its fiscal 2026 outlook, now expecting organic net sales to decline 2-3% and organic operating profit growth to be flat to up low-single-digits [3]. Market Dynamics - The organic decline was primarily driven by weakness in North America, particularly in the U.S. spirits and tequila categories, and continued softness in Chinese white spirits [2]. - Strong growth was noted in Europe, Latin America & Caribbean, and Africa, partially offsetting declines in other regions [2]. Strategic Initiatives - The company is targeting around $3 billion in free cash flow and emphasizes deleveraging efforts, including proceeds from planned disposals [4]. - New CEO Sir Dave Lewis highlighted the need to address weak demand and enhance competitiveness while framing the dividend rebase as a step towards building flexibility for a turnaround [6]. Financial Metrics - Diageo's trailing price-to-earnings (P/E) ratio is around 20-21x, with a price-to-sales ratio of approximately 2.4x and enterprise value to sales around 3.5x [5]. - Debt-to-equity remains elevated at roughly 2.2x, with a current ratio of 1.63 indicating solid short-term liquidity [5].

Diageo (NYSE:DEO) H1 2026 Earnings call February 25, 2026 02:05 AM ET Company ParticipantsDave Lewis - CEO and Executive DirectorNik Jhangiani - CFODave LewisGood morning, welcome to the Diageo Interim Results presentation. As you know, it's my first results session for Diageo. In fact, this is my seventh week. I'll share a few initial impressions and immediate priorities with you later. First, I'd like to hand over to Nik to share with you the results of the first half of 2026. Nik?Nik JhangianiThank you, ...

Diageo (NYSE:DEO) H1 2026 Earnings call February 25, 2026 02:05 AM ET Company ParticipantsDave Lewis - CEO and Executive DirectorNik Jhangiani - CFODave LewisGood morning, welcome to the Diageo Interim Results presentation. As you know, it's my first results session for Diageo. In fact, this is my seventh week. I'll share a few initial impressions and immediate priorities with you later. First, I'd like to hand over to Nik to share with you the results of the first half of 2026. Nik?Nik JhangianiThank you, ...

Diageo cuts forecast again, slashes dividend as US and China demand weakens | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]Item 1 of 2 Johnnie Walker bottles are displayed on a shelf in a supermarket in Sarajevo, Bosnia and Herzegovina, October 29, 2024. REUTERS/Dado Ruvic[1/2]Johnnie Walker bottles are displayed on a shelf in a supermarket in Sarajevo, Bosnia and Herzegovina, October 29, 2024. REUTERS/Dado Ruvic [Purchase Licensi ...

Core Insights - Boston Beer Company's innovation pipeline is central to its strategy as consumer demand shifts towards flavored, functional, and spirits-adjacent offerings, with the "beyond beer" category now accounting for the majority of company volume [2] - The company is focusing on innovation to compete for younger, diverse consumers, even as overall industry volumes face pressure [2] Innovation and Product Development - Sun Cruiser is highlighted as a top volume gainer in ready-to-drink spirits, supported by rapid distribution expansion and strong on-premise traction [3] - Innovations within established franchises like Twisted Tea Light and Truly Unruly are helping to defend market share and improve product mix [3][4] - The innovation strategy is aimed at expanding pack formats, alcohol profiles, and usage occasions without overextending the product portfolio [3] Financial Performance and Market Position - Innovation is contributing to a favorable product mix and margin expansion, allowing Boston Beer to reinvest in advertising and local activation while maintaining strong profitability and cash generation [4] - Although not all innovations immediately offset declines in mature segments, the pipeline is driving incremental category participation and positioning the company for future share gains [4] Industry Challenges - The broader alcohol industry is experiencing volume pressure as consumers moderate discretionary spending and shift towards fewer drinking occasions [5] - Increased competition in ready-to-drink beverages and flavored malt drinks has intensified promotional activity, raising the risk of margin dilution [5] - Execution risks associated with new product launches require sustained marketing support and distributor focus, with input cost volatility and regulatory scrutiny adding uncertainty [6][7] Competitive Landscape - Molson Coors Beverage Company's innovation strategy is focused on expanding beyond traditional beer, with early traction in premium brands and flavored alcohol offerings [8] - Diageo Plc is broadening its category reach with a focus on ready-to-drink and non-alcoholic offerings to attract younger consumers [9][10] - Brown-Forman Corporation is driving category share through premium extensions and innovations in ready-to-drink offerings, despite facing pressure in core whiskey volumes [11]

Core Thesis - Diageo plc is viewed positively by analysts due to its strong brand portfolio, strategic leadership under CEO Dave Lewis, and potential for transformation despite challenges in the alcohol industry [1][5][6] Company Overview - Diageo plc operates in the production, marketing, and distribution of alcoholic beverages across multiple regions including North America, Europe, Asia Pacific, Latin America, and Africa [2] - The company has over 200 globally recognized brands such as Johnnie Walker, Smirnoff, and Guinness [3] Financial Performance - Revenue increased from $15.2 billion in 2017 to $20.5 billion in 2022, but has stagnated at $20.24 billion in 2025 [3] - The stock has declined approximately 37% this year and is 60% below its peak in 2022 [3] Leadership and Strategy - Dave Lewis, the new CEO, brings 27 years of experience and aims to reinvigorate Diageo through cost-cutting and focusing on core growth areas [2][3] - The company is implementing cost-saving measures and strategic capital allocation, including the sale of its 65% stake in East African Breweries Limited for about $3 billion [4] Market Challenges - The primary challenge facing Diageo is the decline in per capita alcohol consumption, particularly in spirits, as consumers are drinking less [4] - Analysts expect continued rationalization of the brand portfolio and divestment of non-core assets to improve financial health [5] Investment Outlook - Diageo is considered an attractive entry point around $85, with a nearly 5% dividend yield and strong cash flow, presenting a favorable risk/reward scenario [5] - The company’s fundamentals and valuation remain compelling despite the broader challenges in the alcohol sector [6]

Core Insights - Sales of high-end tequila, particularly brands like Don Julio and Casamigos, have softened as consumers are opting for less expensive alternatives amid economic concerns [1][5][6] - The spirits industry is witnessing a significant decline in the sales of bottles priced at $100 or more, with an 18% drop reported in the last three months [3][8] - Consumers are increasingly "trading down" to more affordable options, indicating a shift in purchasing behavior due to economic pressures rather than health concerns [4][6][10] Industry Trends - The demand for premium spirits has decreased, with consumers prioritizing budget-friendly options as inflation and job market uncertainties loom [2][4] - Diageo's "super premium" tequila brands have experienced weakened sales, reflecting a broader trend in the spirits market [5][6] - The competitive landscape of the tequila category has intensified, leading consumers to consider alternatives like Astral, which is priced lower than traditional high-end brands [6][8]

Core Viewpoint - Costco is facing a class-action lawsuit for allegedly selling adulterated tequila that contains a significant presence of non-agave sugars, misleading consumers about the quality of its Kirkland Signature tequila products [1][2][3] Group 1: Lawsuit Details - The lawsuit was filed on November 14, 2025, in the U.S. District Court for the Western District of Washington, claiming that Costco's Kirkland Signature tequila is not pure agave as marketed [2] - Affected products include Kirkland Blanco Tequila, Reposado Tequila, Añejo Tequila, Añejo Cristalino Tequila, and Extra Tequila Añejo [2] - The lawsuit alleges that Costco's marketing is deceptive, as consumers are led to believe they are purchasing premium tequila at a premium price [4][5] Group 2: Market Context - Premium tequila sales have increased by 1,270% since 2003, with super-premium brands rising by 1,500% during the same period, indicating a growing consumer demand for high-quality tequila [5] - The definition of tequila is strictly regulated in the U.S. and Mexico, with specific standards for production, labeling, and marketing to prevent adulteration [6][7] Group 3: Scientific Evidence - Scientific testing, including nuclear magnetic resonance (NMR) and isotope testing, has revealed the presence of non-agave sugars in Kirkland tequila products, contradicting Costco's claims of "100% de Agave" [8] - The lawsuit claims that Costco's actions amount to violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and state consumer protection laws [8][10] Group 4: Regulatory Oversight - The Consejo Regulador Del Tequila A.C. (CRT) is responsible for ensuring compliance with tequila production standards, although it is a private non-profit organization rather than a governmental entity [9][10] - The CRT's board is reportedly dominated by representatives from well-known tequila producers, raising questions about its regulatory effectiveness [10]

Core Viewpoint - Jim Cramer expresses skepticism about Diageo plc (NYSE:DEO), stating that the appointment of a new CEO is unlikely to improve the company's fortunes due to ongoing challenges in the alcoholic beverage industry [2][3]. Company Analysis - Diageo plc has appointed Sir Dave Lewis as its new CEO, but Cramer believes that leadership changes will not resolve the fundamental issues facing the company [2][3]. - The alcoholic beverage industry is currently facing significant challenges, with Cramer highlighting that "liquor's the most challenged product in the world" [3]. Industry Context - Cramer notes that even popular products like agave spirits are experiencing declines, attributing this to quality issues and additives [3]. - The overall sentiment in the alcoholic beverage sector is negative, with Cramer indicating that "there isn't anything that is going right in the liquor business right now" [3].

Core Viewpoint - Diageo has appointed Sir Dave Lewis as the new CEO, concluding the search for a successor after Debra Crew's departure in July. Lewis will officially take on the role in January 2026, with interim CEO Nik Jhangiani leading the company through December [1][2]. Leadership Changes - Sir Dave Lewis, former CEO of Tesco, has extensive experience in leading major brands and will bring his leadership skills to Diageo. He has also chaired Haleon and serves as a non-executive director at PepsiCo [2][3]. - Deirdre Mahlan will continue to support the transition as interim CFO, having returned to the role in July [2]. Market Outlook - Lewis acknowledges the challenges in the market but also sees significant opportunities for Diageo. He aims to work with the team to create shareholder value [3][4]. - Diageo recently revised its sales and profit guidance, expecting organic net sales growth to be flat to slightly down, influenced by the Chinese white spirits market and a weaker US consumer environment [4][5]. Financial Performance - For the fiscal first quarter, Diageo reported flat organic net sales, with a 2.2% decline on a reported basis to $4.9 billion. The North America business saw a 2.7% decline in organic net sales, amounting to $1.84 billion, impacted by a challenging consumer goods environment [5][6].