Jim Cramer Says "Some of Diageo's Weaknesses Seem Self-Inflicted"

Diageo plc (NYSE:DEO) is one of the stocks Jim Cramer Recently Discussed. Cramer highlighted the company’s “horrible” results, as he said:

Last night, Diageo reported. The results were so horrible that they had to cut the dividend in half. I always thought the dividend was sacrosanct. The stock of this king of all alcohol fell 15%, one session. As is so often the case, when you get this sort of decline, management… they’re hopeful they can stem the decline. We want that optimism, but they always seem to underestimate the changes in the marketplace. They did list some of the causes of the decline: the consumers feeling the pinch, younger people are drinking less, the GLP-1 drugs eliminate your craving for alcohol, and there’s legal competition from cannabis in half the country. But then these guys dismiss those problems as having a kind of a relative, maybe even transient impact. That’s wrong. They admit that the economic pressure has meaningfully impacted disposable income despite the sanguine tone of our president last night…

Now, some of Diageo’s weaknesses seem self-inflicted. The astounding drop off in the agave spirit… had to be extra painful. Agave has been one of the bright spots for the company, but Diageo’s agave sales fell 23%, a stunning 30.9% decline in Casamigos, 20.9 fall in Don Julio. These are fantastic brands. I think they’ve been hurt by a lawsuit filed in the Eastern District of New York by a trio of relative unknowns, including Sushi Tokyo, alleging that while these two brands claim to be 100% agave, they have non-agave elements in them. I never thought this lawsuit would ever hurt these brands so hard. But it’s definitely weighing on these two Diageo properties that had been stars.

Diageo plc (NYSE:DEO) produces and sells a wide range of alcoholic beverages, including beer, whisky, vodka, gin, and rum.

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