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Diageo is considering the sale or spinoff of its iconic beer brand, Guinness, as part of a strategic review of its portfolio and its stake in LVMH’s Moët Hennessy. The news, first reported by Bloomberg, has spurred a nearly 4 percent rise in Diageo’s share price.
Guinness, a standout in Diageo’s primary portfolio, has exhibited strong performance, bolstered by robust sales, including the success of its alcohol-free variant. This growth contrasts with the recent struggles of Diageo’s key liquor brands, such as Johnnie Walker, which have faced slowing demand for high-end spirits post pandemic.
As Diageo evaluates its options, including a potential divestment or increased investment in Moët Hennessy, the market strength of Guinness could secure a valuation exceeding $10 billion. However, the company’s strategic shift towards higher-margin spirits, fuelled by rising consumer interest in cocktail-based beverages, adds complexity to the decision.
The move underscores evolving priorities in the dynamic beverages sector as companies adapt to shifting consumer preferences and market trends.