Diageo shares surge amid Guinness sale rumour
Diageo’s shares spiked to the top of the FTSE 100 today amid a rumour the company is looking to spin off or sell its most famous brand, Guinness, for up to £8bn.
The transaction was first reported in a piece by Bloomberg, which said Diageo may be looking to review its portfolio to kickstart growth.
The publication said Diageo is looking to shake up its portfolio under chief Debra Crew, with several options on the table. It is looking to sell Ciroc vodka and other under-performing labels.
It also claimed the company was looking at spinning off or selling Guinness, its leading beer brand, valued at around $10bn (£8bn).
This comes after a so-called ‘Guinness shortage’ in the UK, where pubs across the Square Mile ran dry of the drink.
Diageo’s share price has remained broadly flat in the last six months, though they did stage a comeback at the end of 2024, following a historic low.
They’ve been down in the last 12 months, 7.61 per cent down, and 23 per cent down in the last five years.
Following the reports today, Diageo was leading the FTSE 100, up by almost four per cent.
Diageo’s recovery continues
The brand suffered during the pandemic and has also struggled with the cost of living and energy prices, which have raised the price of a pint to almost £8 in some London pubs.
More recently, high inflation and raised interest rates have placed pressure on consumers, who have had to tighten their purse strings.
Pubs and the hospitality industry have been grappling with the impact of Rachel Reeves’ Budget, which included a rise in the minimum wage and rising business rates, hitting watering holes hard.
This led to Tim Martin, the boss of JD Wetherspoon, urging Keir Starmer to reduce taxes on pubs, with business rates set to rise more than 140 per cent for thousands of high street businesses across the UK.
Despite many benefiting from the Christmas period, with a rush of pubgoers in the last two weeks of December bringing much-needed growth across the industry in a “big relief” for businesses.
The Guinness maker, which also produces whisky Johnnie Walker, has also been hit by softening demand in the US and China.
It is set to report its fresh results next month, with some analysts expecting it to shelve expectations and lower them ahead of a sell-off for some brands.
Its chief executive, Debra Crew, its first-ever female CEO, was appointed a month earlier than expected in June 2023, following the hospitalisation and ultimate death of long-time CEO Sir Ivan Menzies.
Since she took charge, Crew has been trying to wrestle with its finances, including the selling of some of its iconic brands. Even Pimms, a British summertime favourite, was considered.
Since coming to the helm, Crew has also rebuilt the team, bringing in a former senior civil servant and BP executive as its new chair, and a new chief financial officer, poached from the world’s largest Coca-Cola bottler.
Diageo has been approached for comment.