GLOBAL: "Affordable indulgence" protects Diageo from recession
The head of Diageo has played down fears that the drinks company could be negatively hit by ongoing uncertainty on the world's stock markets.
In a UK television interview yesterday (29 January), Paul Walsh said that Diageo's presence in a large number of markets puts the company in a strong position, despite the recent credit crush.
"I'm still confident about our market on a global basis," Walsh said. "We operate in 180 countries around the world. If you go to markets like India, China or Latin America and you say 'recession', they would look at you with a very strange face."
Walsh added that, despite fears of a recession in some markets, he did not feel that consumers would sacrifice their desire to drink Diageo's beverages.
"The products we sell represent affordable indulgence," he said. "This isn't like going out and buying a new car or going on a big holiday. This is something to reward yourself with."
Earlier this week, Diageo confirmed that it will buy Californian winery Rosenblum Cellars for US$105m.
"With today's announcement, we're now the second largest premium wine company in the US," Walsh noted. "You have to very selective around the economics. If you overpay for an asset, you will not get the returns. We are very disciplined, and we do not overpay for assets."
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