Diageo currently has no intention of selling off any of its beer labels.
Axios disclosed on December 5th that the British beverage behemoth is exploring the sale of a group of beer assets while aiming to keep Guinness, its primary brand in that sector.
Unnamed insiders informed Axios that, with the exception of Guinness, Diageo’s beer labels have a negative impact on the company’s overall profit margins.
Upon reaching out to Diageo for a response to the report, a company spokesperson stated, “We do not provide comments on market speculation.”
For the fiscal year ending on June 30th, the world’s largest spirits company garnered £3.36 billion ($4.23 billion) in beer sales. The total group sales amounted to £23.51 billion, with net sales (excluding excise duties) reaching £17.11 billion.
At the core of Diageo’s beer operations is Guinness, marketed in over 100 countries.
The primary brewery for the company is located at the St James’s Gate site in central Dublin. Diageo possesses breweries in five African nations and the Seychelles. Additionally, the group, in collaboration with partner breweries, is in the process of constructing another brewery in Ireland.
Diageo recorded a 9% growth in net sales from beer for the twelve months ending in June. On an organic basis, net sales also experienced a 9% increase, although volumes saw a decline of 7%.
Guinness witnessed a 17% surge in net sales. On an organic basis, the net sales for Guinness saw a 16% growth, accompanied by a 1% increase in organic volumes.
Earlier this year, Diageo secured regulatory clearance to acquire an additional 14.97% stake in Kenya’s East African Breweries, bringing the Smirnoff maker’s shareholding in the Nairobi-based brewer to 65%.
In July last year, Diageo completed the sale of its Guinness brewing operation in Cameroon to the France-based peer Groupe Castel.
The group issued a profit warning just last month due to challenges affecting its business in Latin America.
The owner of Johnnie Walker anticipates a decrease in organic operating profit during the first half of its 2024 financial year.
Diageo highlighted a significantly diminished performance outlook for its operations in Latin America and the Caribbean. This division constituted 11% of its annual net sales in the previous fiscal year.
In discussions with reporters following the profit warning, Diageo CEO Debra Crew mentioned that the entire spirits industry was experiencing sales pressure in Latin America, as consumers were leaning towards more affordable products. She noted that Diageo had been successful in gaining market share despite these challenges.
