Diageo, the world’s largest producer in the world, explores a possible split or sale of the Guinness beer brand and reviews its participation in the LVMH Beverage Unit, Moet Hennessy, Bloomberg News reported, citing people familiar with the matter.
The news about a possible sale of the beer brand, one of the star products on the diageo portfolio, helped the company’s shares to rise almost 4%, becoming the largest percentage increase in the index of large capitalizations. However, analysts and a source close to the situation indicated that selling Guinness at this time would not make sense.
Diageo declined to comment on market speculation and LVMH also refused to comment.
Guinness is an exception within the diageo business, which is mainly composed of liquors instead of beer, although its recent performance has surpassed that of key liquor labels such as the Johnnie Walker whiskey.
Lee: Who exhausted Guinness beer in Britain? Pubs ration consumption to subsist
Sales of spirits have had difficulties because the rise in the demand for high -end bottles after the pandemic has been reversed. Meanwhile, Guinness sales have grown double digit every year since 2021, and its alcohol without alcohol has also had great growth.
His recent success could turn Guinness an attractive asset. It would probably be valued above 10 billion dollars, Bloomberg reported, citing the sources.
Diageo liquor brands also offer a higher gain margin and, in general, consumers in developed markets are changing beer to liquor -based drinks, such as cocktails.
However, at the same time, Guinness’s success has led analysts such as Laurence Whyatt from Barclays to question why Diageo would want to sell it.
“I would be surprised that Diageo would like to sell Guinness,” he said, adding that it is unusual for companies to get rid of their assets with better performance.
Lee: Mexico is consolidated as one of the main beer export powers in the world
A source close to the situation agreed that it makes no sense that Diageo sells Guinness in the short term given its performance, and added that Diageo does not need money and that CEO Debra Crew had publicly declared how much the brand appreciates.
Bloomberg also reported that Diageo could seek to deepen his property in the joint company MOET HENNESSY or get out of it completely.
In a note published on Friday, Bernstein Trevor Stirling’s analyst said that taking total control of the LVMH wines and liquors division would probably require “a very reluctant sale of beer/guinness.”
With Reuters information
Inspy, discover and share. Follow us and find what you are looking for on our Instagram!
