John Gallagher’s Post

Diageo : Has the Share Price Reached the Bottom? 💭 📈 Curious about its market position against Pernod Ricard or Brown-Forman, its growth prospects, and our portfolio actions? Don't miss out, subscribe to our newsletter now. 💡 #investing #tba #alcoholicbeverages #dividendstock #dividends #marketleader #stockmarket #stockopine #deepanalysis https://lnkd.in/dXg7QSUr

Diageo continues to respond to a slowdown in sales -- but selling the Pimms brand?! 🍹 The global drinks giant has sold two global brands in the last month, and may not be finished yet. Pimms and the beer brands may also be up for grabs. [The cost of battling with BrewDog, perhaps? 🍺 ] The news comes in the same month that Britvic plc agreed to be taken over by Carlsberg Group for £3.3bn. [Carlsberg committed to make supply chain investments at Britvic.] Could Diageo be a takeover target? I think it more likely that we will see a number of other brands divested, coupled with continued investment in core brands and supply chain operations. Either way, I expect to see more changes within the Diageo portfolio over the coming months. #fmcg #supplychain #foodandbeverage #drinksindustry

Diageo Exploring The Sale Of Some Non-Core Brands Diageo is reported to be working on plans to sell a trio of its non-core brands, including the popular summer drink Pimm’s. According to Sky News, the company has hired bankers at Rothschild to explore whether to sell Pimm’s, which it acquired in 1997 as part of the tie-up between Grand Metropolitan and Guinness which led to the formation of Diageo. The report quotes insiders as saying the process is at an early stage, and may not lead to the British company offloading the Pimm’s brand. The company does not break down sales data by individual brands, but industry sources said that Pimm’s was likely to draw interest from other drinks companies as well as financial investors. Alongside Pimm’s, Diageo is said to be exploring the sale of Safari, a fruit liqueur, and Pampero, a rum brand. The Sky News report noted that it was unclear whether the company would countenance selling the brands separately or whether it was only interested in offers for all three. The potential disposal of the non-core brands from its portfolio of 200 products comes at a challenging time for Diageo and its relatively new Chief Executive, Debra Crew. Its share price has tumbled after a torrid few months in the wake of a profit warning in November which was blamed on weak sales of Scotch whiskey in Latin America and the Caribbean. Those markets collectively account for roughly a quarter of Diageo’s global whisky sales, with that category in turn representing about 25% of the group’s overall revenues. Last month, the company said a “perfect storm” of overstocking and slowing demand had combined to depress profits. Crew, who only took over in June last year following the death of predecessor Sir Ivan Menezes, has pledged to get the business performing again, declaring herself “restless” to improve its fortunes. NamNews subscribers, see latest NamNews items, Link in comments below NamNews Implications: * Large company’s non-core lines can be highly significant acquisitions for medium and smaller-sized companies… * …that tend to drive their new acquisition very hard, in part to justify the purchase price. * Rivals will monitor this initiative… * …or even make a bid. * Either way, anticipate change in the category. #Diageo #Pimms

Market Shift: Premiumization in the Alcohol Industry 🚨 Diageo, one of the world's largest drinks makers, has reported a 1.4% drop in sales over the last year — its first since the pandemic. While this may seem like a red flag, it highlights a broader market trend: premiumization. As consumers become more selective about where they spend, premium brands are poised for long-term growth despite short-term economic pressures like inflation and high interest rates. 🥃 🔹 Johnnie Walker sales fell by 2% globally, with a sharper 10% decline in North America. 🔹 Casamigos tequila (acquired for $700M in 2017) saw a 22% drop in sales. 🔹 Diageo still commands almost 40% of the global Scotch whisky market. CEO Debra Crew emphasized the power of premiumization, driven by: Consumers trading up from beer and wine to spirits 🍸 Rising incomes in developing markets 🌍 The long-term trend of prioritizing quality over quantity ✅ Competitors like Pernod Ricard are also doubling down on premium labels, selling off wine brands to focus on premium spirits and champagne. 💡 Key takeaway: While economic headwinds may challenge consumer spending, the push toward premium products signals a lucrative future for brands that cater to evolving tastes. #Premiumization #AlcoholIndustry #ConsumerTrends #Diageo #BusinessStrategy #JohnnieWalker #Casamigos #MarketShift #Leadership #LinkedInNews

🤔Ever wonder about the origins of your favorite #whisky, #gin, #tequila or #vodka❓ It's likely from Diageo or Pernod Ricard, the leaders in the spirits business known for their extensive brand portfolios built via M&A. 🥃 DIAGEO was established in 1997 through the merger of Guinness and Grand Metropolitan. 🍸 PERNOD RICARD emerged from the 1975 merger of Pernod Fils (dating back to 1872) and Ricard (from the 1930s), the two leading French producers of aniseed-flavored aperitifs. 🔸#Finances for 2023🔸 💰 Revenue: Diageo's revenue (💲21.7B) surpasses Pernod Ricard's (💲13.4B) by 60%. 📈 Growth Rate: Over the past five years, Diageo's growth (6.25% CAGR) has outpaced Pernod Ricard's (5.25%). 💵 Net Income: Diageo generates double the net income of Pernod Ricard: 💲4.7B vs. 💲2.5B. 📊 Gross Margin: Both companies maintain a very healthy gross margin of 60%. 👥 Employees: Diageo (30k employees) has 50% more staff than Pernod Ricard (20k). 🔸#ProductMix🔸 🥃 Whisky Dominance: Diageo is notably strong in whisky, accounting for 37% of its revenue. Other significant categories include beer (15%), tequila (12%), and vodka (9%). 🍹 Top Sellers for Pernod: Pernod Ricard highlights Absolut Vodka (12.7M cases), Jameson (10.7M), and Ballantine's (8.8M) as top sellers. 🔸#MarketPresence🔸 🗽Diageo's largest market is the US, with a sales breakdown of 39% North America, 21% Europe, 19% Asia Pacific, 11% LatAm, and 10% Africa. 🏯Pernod Ricard shows particular strength in Asia, especially India, with revenue distribution of 27% America, 27% Europe, and 42% Asia (plus rest of the world). 🔸#Advertising🔸 📢 In 2023, Diageo allocated 18% of its revenue to advertising (💲3.83B). 🎯 Pernod Ricard spent a more efficient 16% (💲2.1B) on advertising. 🔸#MarketOverview🔸 💹 Global Market Value: The global alcohol market's retail sales value stands at 💲1.17 trillion. 📊 The alcohol beverage market has seen a 4% CAGR over the past five years, with spirits growing at a faster 6% CAGR. 💎 A shift towards premiumization is evident, with 27% of Diageo's sales being super premium (up from 18% five years ago) and 63% being premium or super premium. Notably, Johnnie Walker Black Label grew 16% last year. 🔸#Comparison with AB InBev🔸 🆚 Anheuser-Busch InBev (maker of Bud, Corona, Stella Artois, etc...) boasts a market cap 50% greater than Diageo's and 3✖️that of Pernod Ricard's, with nearly double the combined revenue of Diageo and Pernod (💲59B vs. 💲35B) but only 15% more net profit (💲5.3B net profit) than Diageo. 🔄 Profitability & Growth: Diageo's profitability is attributed to similar % gross margins but significantly fewer employees (154k for Anheuser-Busch InBev vs. 30k for Diageo). As you can imagine it is a lot more efficient distributing $30 whisky bottles than cans of beer. 🏆Diageo's growth rate (6.25% CAGR) is three times faster than Anheuser-Busch InBev's (2.25% CAGR) over the past five years.

♻ The spirits industry is undergoing a transformative shift as consumer demand for sustainable products intensifies. Leading this change is Diageo, the global beverage alcohol company behind iconic brands such as Johnnie Walker, Guinness, and Smirnoff. https://lnkd.in/gSXMvdhs In a groundbreaking initiative in partnership with PA Consulting and PulPac, Diageo has launched a trial of a 90% paper-based bottle for Johnnie Walker Black Label in the on-trade sector. This move represents a significant step towards reducing carbon emissions and showcases the company's commitment to environmental responsibility. This article delves into the details of this innovative project, its significance for the industry, and the strategic insights alcohol marketing leaders and brand owners can glean from Diageo's pioneering effort. #sustainablepackaging #diageo #johnniewalker #sustainability #alcoholmarketing #packaging #paconsulting #pulpac

What does Diageo's sales slump say about the state of the global spirits market? 🤔 Diageo, the world’s leading spirits maker, is facing its first annual sales decline since 2020, raising questions about its recovery strategy in key markets. Diageo's market share in the U.S. has declined because traditional strongholds like whisky and gin have seen a drop in popularity. In the rapidly growing tequila market, premium labels such as Diageo's Casamigos have recently lost market share to more affordable brands. It's not just Diageo, as the premium spirits category is struggling post pandemic. To bounce back, Diageo must adapt its strategies, focusing on innovation and market-specific solutions to rekindle growth. I’m eager to see how Diageo will pivot and use this challenge as a springboard for creativity and growth. Is the decline in luxury spirits a sign of changing consumer preferences, or just a temporary market adjustment? #wineandspirits #beverageindustry #beveragesales

Interesting read

It’s been a tricky first 12 months at the helm of Diageo for CEO Debra Crew. In her first year in the hot-seat, Crew has had to contend with an unwelcome profit warning triggered by inventory mismanagement in Latin America, as well as cautious US consumers rowing back on Covid consumption excesses. It's led to the Johnnie Walker brand owner this week reporting its first post-Covid net sales decline, with sales down 0.6% on an organic basis. One bright spot, however, was at home, with sales in GB up by 5%. Key to this was the surge (pardon the pun) of Guinness, which has continued its remarkable growth tear to end the year up 30%. With everyone from Olivia Rodrigo to Keir Starmer professing their love for a pint of the black stuff, Guinness’ universal appeal shows strong brands and clever marketing can prevail, even in the face of economic headwinds. Diageo will need more similar success stories if it is to win back investors’ confidence. My piece for The Grocer.

What a whirlwind week for #nonalc first Diageo buys Ritual Zero Proof, then LVMH invested in FRENCH BLOOM (can't hurt if your surname is Champagne Taittinger!!) - how much did they pay, what are they now valued at & who is next? Will Pernod Ricard buy Ghia or will The Coca-Cola Company buy hiyo? What are your predictions for this nascent & fast growing category? https://lnkd.in/gYvJF5h4