Diageo’s share price retreated in London today (27 January) as the drinks giant denied market speculation swirling around Guinness and Moët Hennessy.
After initially declining to comment on “market rumour” on Friday, when Bloomberg suggested Diageo was weighing up selling the Guinness stout brand and reviewing its shareholding in Moët Hennessy, the London-listed company took a different approach over the weekend.
Go deeper with GlobalData
“We note the recent media speculation around the Guinness brand and our stake in Moët Hennessy and we can confirm that we have no intention to sell either,” Diageo said via a brief official statement on Sunday.
The stock reacted on the downside and was down 1.1% at 2,475 British pence as of 10:55am BST in London. Shares in Diageo stood at 2,501.5p on Friday, up 4.16% on the day, when Just Drinks put out its reaction to the speculation.
Diageo added in its weekend statement that it will “next update the market” at the company’s interim results stage on 4 February.
On Friday afternoon UK time, Bloomberg put out its report, quoting unnamed sources, that Diageo was studying a range of options for the two brands as part of a wider review of its portfolio.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe news agency said the company was looking at the idea of listing or selling its Guinness beer unit, and mulling whether to increase its holding in Moët Hennessy or exit the business.
Diageo has owned a 34% stake in Moët Hennessy, the drinks division of luxury-goods group LVMH, since 1994.
“We don’t comment on market rumour,” a Diageo spokesperson responded.
In December 2023, Axios reported Diageo was seeking to sell a clutch of assets in beer but retain Guinness, its flagship brand in that sector.
At the time, Diageo had no plans to divest any of its beer brands.
Last year, the company sold its majority stake in African unit Guinness Nigeria to Singapore-based conglomerate Tolaram.
In a note to clients, published on Friday, Bernstein Société Générale analyst Trevor Stirling said previous Diageo CEOs had “made no secret of the fact that they would be delighted” to take full control of Moët Hennessy.
“However, achieving agreed terms has always appeared problematic, even if LVMH were willing to sell,” Stirling said. “Such a deal would severely stretch the Diageo balance sheet, possibly necessitating a very reluctant disposal of beer/Guinness.”
In recent quarters, Diageo has offloaded a clutch of spirits brands. Last week, the company sold Cacique rum to French spirits business La Martiniquaise-Bardinet.
In July last year, the group sold its Safari liqueur brand to Portuguese spirits group Casa Redondo, for an unknown sum.
Later that same month, Diageo announced the sale of Pampero rum to Italian food spirits giant Gruppo Montenegro, as it looked to focus on the “core areas of strength” in its portfolio.
Before Christmas, Diageo declined to comment on a report the company planned to offload its Cîroc vodka brand following the end of a tie-up with rapper Sean ‘Diddy’ Combs.
On 4 February, Diageo is due to update markets with its first-half results for fiscal 2025.
Diageo reported its preliminary 2023/2024 results in July, marked by a “challenging year” as volumes dropped 3.5%, including declines for Cîroc.
Both reported and organic growth declined, by 1.4% and 0.6% respectively, to register revenue of $20.3bn.
In the final numbers detailed in the annual report, volumes were down 5% on a reported basis at 230.5m equivalent units (EU). Both organic and reported sales revenue fell 1%.
Operating profit was up 8% reported but was 5% lower in organic terms, while earnings per share dropped 12% to $173.2.
