Diageo has no plans to divest any of its beer brands, Just Drinks understands.
Earlier today (5 December), Axios reported that the UK drinks giant is seeking to sell a clutch of assets in beer but retain Guinness, its flagship brand in that market.
Unnamed sources told Axios that, aside from Guinness, Diageo’s beer brands weigh on the company’s overall margins.
Just Drinks approached Diageo to comment on the report. A company spokesperson said: “We do not comment on market speculation.”
In the year ending 30 June, the company, the world’s largest spirits business, generated sales from beer of £3.36bn ($4.23bn). Group sales were £23.51bn (with net sales – minus excise duties – equalling £17.11bn).
At the centre of Diageo’s beer business is Guinness, which it sells in more than 100 markets.
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The company’s main brewery is at the St James’s Gate site in central Dublin. Diageo owns breweries in five African countries and the Seychelles. The group, which also uses partner breweries, is planning to build another of its own breweries in Ireland.
The net sales Diageo booked from beer for the 12 months to the end of June were up 9%. Organically, net sales also increased 9% but volumes were down 7%.
Net sales from Guinness increased 17%. On an organic basis, Guinness’ net sales grew 16%, with volumes up an organic 1%.
Earlier this year, Diageo received regulatory clearance to buy an additional 14.97% stake in Kenya’s East African Breweries. The deal took the Smirnoff maker’s shareholding in the Nairobi-based brewer to 65%.
In July last year, Diageo sold its Guinness brewing operation in Cameroon to France-based peer Groupe Castel.
Last month, the group issued a profit warning on the back of pressure on its business in Latin America.
The Johnnie Walker owner sees its organic operating profit declining in the first half of its 2024 financial year.
Diageo pointed to “a materially weaker performance outlook” for its operations in Latin America and the Caribbean, a division that accounted for 11% of its annual net sales in its last fiscal year.
Speaking to reporters after the profit warning, Diageo CEO Debra Crew said the whole spirits industry was seeing pressure on sales in Latin America, with drinkers opting for cheaper products. Diageo, she added, had been gaining market share.