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Diageo is set to report its second quarter and half-year results tomorrow (10 February). Here, just-drinks takes a look at the highs and lows for Diageo over its second fiscal quarter, the final three months of calendar 2010.

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  • More mergers and acquisitions chatter emerged during November. Market speculation arose that Diageo was close to sealing its deal to take a controlling stake in China's Quanxing Group, which owns 39.7% of the country's Shui Jing Fang white spirits maker. Diageo has been awaiting approval of the deal from the Chinese Government and UK Government officials said that they would raise the matter during a state visit to China. Diageo continues to wait for approval.
  • Back in the UK, Diageo became embroiled in a spat with the British Beer & Pub Association over its views on alcohol taxation. The trade body believes beer should be rewarded for its lower strength versus spirits, but Diageo said that all drinks should be taxed at the same rate per alcohol unit.
  • In late November, Diageo officially opened its controversial Captain Morgan rum distillery in the US Virgin Islands. Once in operation, the distillery will have the capacity to distill up to 20m proof gallons of Captain Morgan rum per year. The controversy came when Diageo's decided to switch Captain Morgan production from Puerto Rico to the US Virgin Islands, a move that will see the Virgin Islands Government pocket an estimated $130m in tax revenue.
  • In the Middle East, Diageo said that it would double the size of its business in the region within the next five years by selling more premium drinks in travel retail at key airports. Net sales at Diageo's Middle East and North Africa business (MENA) rose by 16% in its most recent fiscal year, to the end of June 2010.
  • Finally, one of Diageo's last moves of the quarter was to announce that it would move the global brand director for its Guinness brand, Brian Duffy, to become its first global category director for beer. Duffy will be accountable for conceiving the total category strategy for Diageo's beer brands.

For Diageo's Q1 results, click here.


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