Diageo issued a statement on Sunday saying it does not intend to sell its Guinness brand or stake in Moët Hennessy.
The move came after Bloomberg News reported on Friday that the British beverage giant was exploring options for its popular Irish stout and reviewing its 34% share in the drinks division of luxury goods group LVMH.
“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,” Diageo said.
Guinness is an outlier in Diageo’s drink portfolio, which mostly consists of spirits such Johnnie Walker whiskey and Smirnoff vodka. However, its performance recently has outshone the company’s other brands, with reports before Christmas suggesting that high demand has led to shortages of the stout in the UK.
Citing people familiar with the matter, Bloomberg said that Diageo was mulling selling or spinning out Guinness as a standalone company, as well as offloading or increasing its stake in Moët Hennessy. The report said a Guinness sale could fetch Diageo upwards of $10bn (£8bn).
Analysts subsequently dismissed the speculation, with Laurence Whyatt at Barclays wondering why Diageo would want to sell Guinness when it is their best-performing asset. Whilst last year was a challenging period for the company after weak sales of whiskey in some key markets, sources noted that Diageo does not need the money and CEO Debra Crew has publicly stated how much she likes the brand.
NAM Implications:
- Common sense application:
- Why would Diageo want to sell Guinness when it is their best-performing asset?
