Know your Brands: Diageo PLC

In the realm of premium drinking experiences, names like Johnnie Walker, Tanqueray, Captain Morgan, and Cîroc have become synonymous with quality and enjoyment. Whether you're indulging in a night out on the town or savouring a relaxed gathering, these renowned brands share a common home under Diageo PLC, a trailblazing company in the premium beverage industry.

Diageo PLC operates in various categories, including spirits and beer, with over 200 brands available in more than 180 countries across North America, Europe, Turkey, Africa, Latin America, the Caribbean, and Asia Pacific. Their premium drink lineup features Scotch whisky, gin, vodka, rum, beer, Irish cream liqueur, wine, raki, tequila, Canadian whisky, American whiskey, progressive adult beverages, cachaca, brandy, and ready-to-drink options.

Some of their renowned brands include Johnnie Walker, Crown Royal, J&B, Buchanan’s, and Windsor whiskies, as well as Smirnoff, Ciroc, and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray, and Guinness.

Disclaimer: The brands may not be limited to the logos on the image and may change. The use of logos are for educational purposes only.

Diageo has adopted a premiumisation strategy in recent years, focusing on promoting its premium and super-premium spirits.

In 2020, the CEO emphasized the significance of this trend, stating, "The premiumisation trend has continued through this period, and I'd say that's the biggest source of value creation for a company like Diageo, people drinking better and trading up to a Talisker single malt or a Johnnie Walker Blue (whisky) in China." He also expressed the company's intent to pursue further acquisitions of fast-growing brands with high margins in the premium market.

Financials, Share Buyback and Dividends

Diageo's 2023 year-end results, published in August, showed organic net sales growth in various categories, particularly in their top three: scotch, tequila, and beer. Premium-plus brands accounted for 63% of reported net sales, which amounted to £17.1 billion, reflecting a 10.7% increase driven by robust organic sales growth and favourable foreign exchange effects.

Organic net sales increased by 6.5%, with a 7.3 percentage point boost in price/mix due to strong pricing and premiumisation efforts. However, reported volume decreased by 7.4%, with organic volume down by 0.8%. View full results here.

In February 2023, Diageo announced a buyback program valued at £0.5 billion. Regarding dividends, Diageo typically pays dividends twice a year – an interim dividend in April and a final dividend in October, with an approximate split of 40/60.

Expansion

Diageo has been expanding its premium drink portfolio, recently completing acquisitions such as Don Papa Rum, a super-premium dark rum from the Philippines; an Australian premium coffee liqueur called Mr. Black; and Balcones Distilling, a Texas craft distiller known for producing American single malt whisky. According to the company, the latest acquisition of Don Papa Rum is in line with Diageo’s strategy to acquire high-growth brands with attractive margins that support premiumisation.

Earnings

Diageo PLC is expected to release its interim results in January 2024. To invest in Diageo PLC, you can head over to your EasyUSD and EasyGBP account, where you can buy a whole or fraction of a share.