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Drinks

Diageo Seeks To Sell Beer Portfolio On Margin Concerns: Reports

By Reuters
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Diageo Seeks To Sell Beer Portfolio On Margin Concerns: Reports

Diageo is seeking to divest its beer portfolio on margin concerns, except flagship brand Guinness, Axios reported, citing sources familiar with the world's largest spirits maker.

The company is looking to sell beer brands including Smithwick's, Kilkenny and Harp Lager, based in Ireland, and Tusker in Kenya, among others, Axios reported, adding that its beer brands were a margin drag on the rest of the business.

Diageo declined to comment on the report, with an RTÉ report later on Wednesday indicating that Smithwick's, Kilkenny and Harp were not earmarked for sale.

Potential buyers include Heineken and Bulmers maker C&C Group, according to a report in the Irish Independent.

Beer Portfolio

Beer sales of £3.36 billion (€3.9 billion) accounted for just over 14% of total sales at Diageo for the year ended June 30, whereas spirits sales contributed 81%.

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The Johnnie Walker whisky maker in November warned of a drop in first-half operating profit growth on weakness in some regions.

Diageo chief executive Debra Crew said that it was difficult to predict when the company could clear the inventory issues in Latin America.

The world's top spirits maker expects sales to fall by more than 20% in Latin America and the Caribbean, which makes up around 11% of the company's sales.

The announcement spooked investors because Diageo did not flag any problems in a September trading update, leaving some wondering how the company was blind to such a big problem that would have been brewing for some time.

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Elsewhere, the spirits giant launched a new global responsible drinking campaign, The Magic of Moderate Drinking, to encourage consumers to drink responsibly over the festive period.

The story is told through a film featuring Guinness, Johnnie Walker, Tanqueray 0.0 and Seedlip, and a host helping guests to experience moderate drinking.

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