(UK – Global beverage giant Diageo has denied plans to divest its beer brands following earlier reports alleging the company’s intention to offload some of its beer assets. 

The denial follows speculation prompted by an Axios report suggesting that the Don Julio maker was exploring the sale of certain beer assets, including Smithwick’s, Kilkenny, Harp Lager, and Tusker. 

According to unnamed sources cited by Axios, Diageo aimed to retain its flagship brand, Guinness, as the remaining beer brands were seen as impacting the company’s overall margins. 

The brewing giant’s decision to retain its beer portfolio comes on the heels of a recent profit warning that rattled investors.  

Diageo revised down its revenue and profit forecast for the first half of the fiscal year, citing a weaker performance outlook for Latin America and the Caribbean. “The region is expected to witness a significant 20% decline in organic sales for the six-month period,” it stated. 

Diageo CEO Debra Crew addressed the challenges faced by the Latin America/Caribbean business, attributing the downturn to macroeconomic pressures resulting in lower consumption and consumer downtrading.  

Despite these headwinds, Crew said, “Diageo has been gaining market share in the spirits industry amid a broader trend of consumers opting for more affordable products.” 

In the fiscal year ending June 30, Diageo reported £3.36 billion (US$4.23 billion) in sales from its beer segment, contributing to the company’s total group sales of £23.51 billion (US25.9 billion).  

Guinness remains a key player in Diageo’s beer business, sold in over 100 markets globally, with the main brewery located at the St James’s Gate site in central Dublin.  

Diageo owns breweries in five African countries and the Seychelles, with plans underway to build another brewery in Ireland. 

Despite challenges in the beer sector, Diageo saw a 9% increase in net sales from beer for the 12 months ending June, with Guinness contributing significantly to this growth with a 17% increase in net sales.  

The company’s commitment to its beer portfolio is further underscored by recent regulatory clearance for the acquisition of an additional 14.97% stake in Kenya’s East African Breweries, bringing its total shareholding to 65%. 

Diageo’s decision not to divest its beer brands reflects its strategic approach to navigating market challenges, emphasizing the importance of retaining a diversified portfolio and responding to evolving consumer preferences.  

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