Diageo has taken the unusual step of formally clarifying recent press speculation claiming a divestment of its Guinness business and/or Moët Hennessy stake is in the offing.
A report by Bloomberg on Friday (24 January) cited “people familiar with the matter” as its source, linking the group to a “reviewing its portfolio” position, specifically around Guinness and the 34% holding in LVMH’s beverage alcohol division. The report featured the standard caveat that “no final decisions have been made, and there’s no certainty the deliberations will lead to any deals”.
When contacted on the same day as the article by Global Drinks Intel, a Diageo spokesperson said the company would not be commenting on market speculation. However, on Sunday, (26 January), a short statement was released by the group.
“We note the recent media speculation around the Guinness brand and our stake in Moët Hennessy and we can confirm that we have no intention to sell either,” the statement read. “We will next update the market with interim (six months to the end of December) results on 4 February and we look forward to hosting our Guinness investor and analyst day on 19-20 May.”
Coincidentally, Global Drinks Intel‘s senior reporter, Henry Mathieu, considered the near-term prospects for Moët Hennessy last week, prompted by a client note from investment analysts at Bernstein. The unit, part of French high-end goods giant LVMH, is out of kilter in profit-generation terms with the rest of the business.
“Looking forward,” Mathieu wrote, “LVMH may well – and should, according to some analysts – consider splitting Moët Hennessy and distributing its shares to the group’s shareholders.”
Diageo has consistently stated its preference to retain Guinness, given the brand’s firm positioning in mature alcohol markets and its longstanding growth trajectory in emerging markets. Indeed, only seven months ago, Guinness signed a sponsorship agreement with the English Premier League to sponsor the high-profile soccer tournament for the next four seasons. The Johnnie Walker owner has also regularly stated a willingness to acquire Moët Hennessy outright, should the opportunity arise.
Bloomberg also claimed late last year that the group is on the hunt for a buyer for the Cîroc vodka brand, with Diageo choosing not to comment on the report. The company’s brand divestments to date have been of smaller, lower-priority marks, including fruit liqueur Safari and Pampero rum last year, with Venezuelan rum Cacique exiting as recently as this month.
