Diageo plc DEO has been making smart moves to enrich experience and drive growth. In the latest announcement, the company has unveiled the sale of its 54.4% shareholding in Seychelles Breweries Limited to Phoenix Beverages. The transaction, which is valued at nearly $80 million, is likely to be completed in June this year. Phoenix Beverages is a subsidiary of Mauritius-based IBL Group.
More on DEO’s Latest Announcement
Per the terms of the agreement, Diageo will maintain the ownership of its brands presently produced by Seychelles Breweries (Guinness and Smirnoff RTDs) and distribute IPS in-market. This will be licensed to Seybrew in a new license and royalty agreement in the long run.
The long-term partnership with Phoenix Beverages goes in sync with DEO’s portfolio-management initiative. This also highlights Diageo’s commitment to having a robust operating model in the Indian Ocean Islands designed to deliver sustainable growth.
This transaction also creates Diageo’s alliance with Phoenix Beverages as a partner in the Indian Ocean region. This key beverage producer boasts extensive expertise across the Indian Ocean Islands and is DEO’s partner in Mauritius. This partnership also unlocks value for Seychelles Breweries, thus aiding growth.
What Else to Know?
Diageo is refining its $2 billion productivity program to drive efficiency across the business to bring sustainable growth. A key focus is balancing cost savings with strategic reinvestment, particularly in marketing and brand activation. It remains committed to maximizing value while building the right capabilities for future success.
Diageo has been experiencing significant gains from improved price/mix, which have been aiding growth despite soft volume. In the first half of fiscal 2025, organic net sales rose 1% year over year, marking a return to organic sales growth and a sequential improvement from the second half of fiscal 2024. Hence, management expects to continue driving productivity and pricing to offset the cost inflation.
However, this Zacks Rank #4 (Sell) company’s shares have fallen 14.6% in the past three months against the industry’s 4.8% growth. Diageo has been witnessing soft volumes across key regions, which hurt net sales in first half of fiscal 2025. North America, Europe and LAC saw volume declines from cautious consumer sentiment. Increased overhead costs, including staff expenses and one-off strategic investments, have also been weighing on its profits.
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Diageo plc (DEO): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Nomad Foods Limited (NOMD): Free Stock Analysis Report Utz Brands, Inc. (UTZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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