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The FTSE 100 drinks giant Diageo has firmly rejected rumours surrounding the potential sale of its iconic Guinness brand, putting an end to widespread market speculation that had driven its shares up by more than 4% last Friday.
The company issued a decisive statement on Sunday, categorically denying intentions to divest either the Guinness brand or its substantial 34% stake in luxury drinks business Moët Hennessy. Market analysts had previously suggested the Irish stout brand could command a valuation of up to £8bn ($10bn) in a potential sale or spin-off scenario.
Guinness has emerged as the crown jewel in Diageo’s extensive portfolio, experiencing remarkable double-digit growth annually since 2021. The brand’s success has been particularly noteworthy amidst challenging market conditions that have seen the broader spirits category struggle in the post-pandemic environment.
The surge in Guinness’s popularity, especially among younger consumers and women, has been attributed to successful social media campaigns featuring high-profile influencers and celebrities. The demand reached such heights that Diageo was compelled to tap into Irish reserves in December to prevent British pubs from running dry.
The speculation about Guinness’s potential sale emerged during a testing period for Diageo, with its share price performance underwhelming since Debra Crew assumed the chief executive position in summer 2023. The company’s broader portfolio, including brands like Johnnie Walker, Smirnoff, and Captain Morgan, has faced headwinds as premium spirits consumption normalised following the pandemic boom.
Diageo has confirmed its next market update will coincide with its half-year results on 4th February, with a dedicated Guinness brand investor and analyst day scheduled for May. The company’s stance effectively closes the door on any immediate structural changes to its portfolio composition.
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