Diageo has unsurprisingly refused to be drawn on a Bloomberg report that the company is reviewing its stake in Moët Hennessy and weighing up the future of beer business Guinness.
According to unnamed sources cited by Bloomberg, the UK-listed drinks giant is studying a range of options for both assets as part of a wider review of its portfolio.
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Diageo has owned a 34% stake in Moët Hennessy, the drinks division of luxury-goods group LVMH, since 1994.
Bloomberg’s sources said Diageo could look to up its shareholding or leave the venture.
The publication said the company is also looking at the idea of listing or selling its Guinness unit.
“We don’t comment on market rumour,” a Diageo spokesperson told Just Drinks.
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By GlobalDataShares in Diageo stood at 2,501.5p, up 4.16% on the day.
The positions of the Moët Hennessy stake and of Guinness in the Diageo portfolio have periodically been the subject of market speculation.
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 earlier today, 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. Yesterday, 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.
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.
Diageo is scheduled to report its half-year results on 4 February.
