Clooney’s tequila perks up Diageo

THE world’s biggest spirits company, Diageo, has received more investor cheer in recent times. Midas recommended the shares in 2017 at a price of £23.26. They have since risen 65 per cent to £38.47 and chief executive Ivan Menezes is determined to keep the spirit alive.

Diageo’s top brands include Johnnie Walker whisky, Tanqueray gin and Captain Morgan rum, as well

as that Christmas favourite, Baileys. This stable of favourites helped the business deliver £12.7billion of sales and £3.7billion of profit in the year to June 2021. But Menezes wants to go further. Last month, he said sales should increase by 5 to 7 per cent annually between 2023 and 2025, with operating profits up by 6 to 9 per cent over the same period.

Major shareholders are confident that Menezes can deliver. Spirits are increasingly popular among today’s drinkers, particularly premium brands, where Diageo’s include Ciroc vodka and Casamigos, the tequila business founded by George Clooney.

Menezes benefits from sheer scale, which means that costs

are lower than rivals’ and the company can sell its wares more widely than others. Since acquiring Casamigos in 2017 for up to £750million for instance, Diageo has increased that firm’s sales 11-fold.

The group proved its mettle during the pandemic, increasing revenues in stores and online, as bars and restaurants closed. Long-term investment remains a priority too, in key markets such as America, Africa, India and China, where drinking habits are changing as incomes rise.