Diageo Reviews Portfolio, Considers Guinness Spin-Off or Sale
Diageo Plc is exploring strategic options for its portfolio, including a potential spin-off or sale of its Guinness beer brand. The British spirits giant is also reviewing its 34% stake in Moët Hennessy, its joint venture with LVMH.
Sources familiar with the matter indicate that Diageo is considering various possibilities, including a potential listing of Guinness, which could garner a valuation exceeding $10 billion. The company may also gauge takeover interest in the beer brand.
Diageo's minority stake in Moët Hennessy is also under consideration, according to sources. Should the company decide to exit the joint venture, LVMH has the contractual obligation to acquire the stake at a 20% discount.
The strategic review comes as Diageo faces challenges including declining sales in China and the US, as well as inventory issues in Mexico and Brazil. CEO Debra Crew is under pressure to revive growth after a rocky start to her tenure.
Investors and analysts anticipate that Diageo may adjust its growth targets in its upcoming earnings report. The company is also contemplating broader portfolio changes, including potentially deepening its ownership in Moët Hennessy or exiting the venture altogether.
Diageo has previously sold certain underperforming brands, such as Ciroc vodka. The company is also considering further divestments to streamline its portfolio.
Despite the portfolio review, Diageo remains a major player in the alcoholic beverages industry. It boasts a strong portfolio of high-performing brands, including Johnnie Walker, Don Julio, and Crown Royal.
The company is taking measures to address its short-term challenges, including appointing a new head for its Mexico business and a new Chief Financial Officer.
Analysts expect Diageo to provide more details on its portfolio戦略 and financial outlook when it reports earnings on February 4.