I gave a hold rating to Diageo PLC ( DGEAF ) in June, as I wanted to see more signs of recovery, especially in the core spirits segment, and hence, I believed one should just wait andI'm a passionate investor with a strong foundation in fundamental analysis and a keen eye for identifying undervalued companies with long-term growth potential. My investment approach is a blend of value investing principles and a focus on long-term growth. I believe in buying quality companies at a discount to their intrinsic ...

Core Viewpoint - The analyst has assigned a hold rating to Diageo PLC (DGEAF) in June, indicating a desire for more signs of recovery in the core spirits segment before making further investment decisions [1]. Company Analysis - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing a blend of value investing principles and long-term growth [1]. - The strategy involves purchasing quality companies at a discount to their intrinsic value and holding them to allow for compounding of earnings and shareholder returns [1].

Asahi Group Holdings is to pay $2.3bn for Diageo’s business in Kenya, which includes the UK group’s majority stake in East African Breweries. The Super Dry brewer is buying Diageo’s 65% stake in East African Breweries (EABL) and its 53.7% shareholding in Kenyan spirits group UDVK. Earlier this year, it was reported Diageo had hired banking advisers to carry out a review of EABL, which markets beer brands including Tusker and Serengeti Lager. Asahi said the business “offers high growth potential and sta ...

Johnnie Walker and Guinness maker Diageo has agreed to sell its 65% stake in East African Breweries to Japan's Asahi Holdings for $2.3 billion. ...

Diageo finally opened the doors to its new Guinness attraction in London on Thursday, two years later than planned but just in time for incoming CEO Dave Lewis https://t.co/ui5oHe412Y ...

Core Viewpoint - Workers at Diageo's Belfast production plant have voted to strike due to an "inadequate pay offer," but Diageo asserts that there will be no shortages of Guinness during the Christmas period [1][3]. Group 1: Strike Details - Approximately 90 workers are set to walk out for eight days starting December 5, in response to pay concerns [1]. - Unite claims that the Belfast facility is the world's largest producer of Guinness Zero, suggesting that the strike will significantly disrupt production [3]. - Diageo has stated that it has contingency plans to manage any potential impact on production and supply [3]. Group 2: Company Position - Diageo emphasizes that there will be no disruption to the supply of Guinness or Guinness 0.0 during the Christmas period [3]. - The company expressed disappointment over the strike ballot outcome but believes continued engagement is essential for a resolution [5]. - Diageo did not provide specific details regarding the negotiations or the demands from Unite [5]. Group 3: Union's Perspective - Unite's general secretary criticized Diageo for prioritizing profits over fair worker compensation, stating that the company can afford to make a decent pay offer [4]. - The union has not clarified its demands or whether further negotiations are planned before the strike [4]. - Regional officer Michael Keenan urged Diageo management to return to negotiations with a more acceptable pay offer [6].

Core Insights - Sin stocks represent companies in controversial industries such as alcohol, tobacco, gambling, and cannabis, which have historically provided high returns due to stable demand even during economic downturns [2][5] - The consistent consumer behavior towards sin products leads to reliable cash flows and resilient business models, making these stocks attractive to investors [3][5] - Sin stocks often trade at attractive valuations due to reduced competition from institutional investors who avoid these sectors for ethical reasons [3][6] Industry Overview - Sin stocks benefit from inelastic demand, allowing companies to maintain profitability through pricing power and brand loyalty [5][8] - Regulatory barriers create a protective moat for established players, reducing the threat of new entrants and enhancing market stability [8][9] - Trends in the sin stock sectors include premiumization in alcohol, transformation towards reduced-risk products in tobacco, and rapid expansion in the cannabis market [10][11][12] Company Highlights - Philip Morris International is transitioning towards reduced-risk products like IQOS and ZYN, capitalizing on strong pricing power and expanding its smoke-free portfolio [7] - Diageo Plc leverages regulatory protections and strong brand loyalty to generate consistent cash flows, with a focus on premium alcoholic beverages [9] - Turning Point Brands is focusing on modern oral products and expanding its production capabilities, positioning itself for long-term growth [15] - Las Vegas Sands is enhancing its integrated resort offerings in Asia, supported by strong cash generation and disciplined capital deployment [18] - Universal Corporation is diversifying beyond leaf tobacco into adjacent ingredients, emphasizing cost control and supply-chain reliability for steady growth [20]

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].

Financial Performance - Diageo's net sales reached $49 billion, a 2% year-over-year decrease [2] - Organic sales remained flat, although better than analysts anticipated [2] - Sales in China decreased by more than 7% [3] - Organic sales in the US fell nearly 3% [3] Market Trends and Consumer Behavior - Consumers are trading down to cheaper alternatives, impacting premium tequila brands like Don Julio and Casamigos [3] - A clear shift down in quality consumption is observed as consumers tighten their wallets [4] - The premium spirits industry is experiencing a post-pandemic slowdown due to inflation, moderation trends, and tariffs [4] - Gen Z consumers are drinking less, influenced by fitness and health trends [6] - Economic worries affect Hispanic and non-Hispanic consumers, impacting beer sales [7] Company Outlook and Leadership - Diageo cut its guidance due to changing consumer behavior [4] - Investors are advised to await further guidance after the holiday season [5] - Diageo's CEO Deborah Crew left in July, and a replacement is yet to be named [5]

Core Insights - Diageo, the world's largest spirits maker, has reduced its sales and profit outlook following a disappointing quarterly performance, with shares hitting a decade low [1][2] Financial Performance - Net sales for Diageo were reported at $4.9 billion, reflecting a 2% year-over-year decline, while organic sales remained flat, which was better than analysts' expectations [2] - Volumes increased nearly 3%, but this was insufficient to improve overall results due to adverse impacts from pricing and product mix [2] Regional Performance - Latin America showed strong demand, particularly in Brazil, while sales in China and the US faced significant declines, with China experiencing a drop of over 7% [3][4] - In the US, organic sales fell nearly 3%, as consumers shifted from premium brands like Don Julio and Casamigos to more affordable options [3][4] Market Trends - The premium spirits industry is experiencing challenges post-pandemic, with inflation, moderation trends, and tariffs affecting global trade [4] - A notable shift in consumer behavior is observed, with a trend towards lower-quality products as consumers tighten their spending [4] Leadership and Future Guidance - Diageo's leadership is currently unstable, with the CEO leaving in July and no replacement announced, leading to a message of waiting for further guidance after the holiday season [5] Demographic Insights - There are significant demographic shifts affecting consumption patterns, particularly among Gen Z consumers who are drinking less due to health and wellness trends [6] - Concerns about the economy are prevalent among Hispanic and non-Hispanic consumers, impacting various sectors, including beer [7][8]