Diageo has declared it is party time as far as its growth ambitions go.
Often considered to be a pedestrian company with slow but steady revenue gains each year, Diageo has now announced bold ambitions for a 50% increase in its share of the alcoholic drinks market by 2030.
Key to achieving this goal is to invest more money in marketing, digital capabilities and staff. Diageo already has a strong reputation for being a dab hand at clever marketing when it comes to Guinness so perhaps it has similar plans to make its other products front of mind for consumers.
“It helps that Diageo already has a global reach and a wide range of strong brands across areas like vodka, whisky, gin and tequila. It came under criticism for paying top dollar for relatively young brands like Casamigos and Aviation Gin, but their sales are growing incredibly fast, and the products are ‘on trend’ for drinkers,” said AJ Bell’s Russ Mould.
“A cynic might say it is all very well Diageo declaring big growth goals but achieving them is another matter. However, from a stock market perspective, investors like to know what goals a business thinks are achievable as it sets expectations for future earnings.
“Currently helping Diageo is the fact that people have been eager to get out and socialise following lockdowns. We could have seen a big chunk of the nation decide they no longer wanted to congregate in crowded places, but so far, the signs have been very encouraging for the drinks sector.
“Pubs and bars are filling up again, and nightclubs are also getting back on their feet. This is providing momentum for Diageo’s earnings and what would help next is a removal of more travel restrictions, as that could pave the way for a recovery in duty-free spirits sales.”