Global drinks giant Diageo is reportedly considering selling or spinning off its Guinness brand.
Citing sources familiar with the matter, a report by Bloomberg said Diageo was planning a shake-up of its drinks portfolio. Moves could include offloading brands such as Guinness and Cîroc, as well as either selling or increasing its 34% stake in LMVH’s Moët Hennessy drinks division, it said.
A Guinness sale could fetch Diageo upwards of $10bn (£8bn), Bloomberg reported.
Approached by The Grocer, a spokesman for Diageo said it did not comment on “market rumour”.
A sale of Guinness has long been rumoured to be under consideration by Diageo. The London-listed company has shifted its focus away from beer and toward premium spirits such as tequila in recent years.
The group sold its controlling interest in Red Stripe to Heineken in 2015, and also has offloaded breweries in Africa as part of a more agile and “asset-light” operating model.
Read more: Guinness is a bright spot in Diageo’s otherwise tough year
Guinness, however, has been a bright spot in a challenging period for Diageo, driving an 18% uplift in global beer volumes for the group in the year to June.
Meanwhile, innovations like Nitrosurge and the growth of Guinness 0.0 – now the UK’s biggest alcohol-free beer brand in the off-trade [NIQ 52 w/e 29 July] – helped Guinness sales in Great Britain grow by 30%.
Late last year, Diageo was forced to limit supplies to both the on- and off-trade in the hopes of avoiding a Christmas shortage of the stout.
In order to meet rising demand, Diageo is currently building a new €200m (£160m) carbon neutral brewery for Guinness in Kildare. It has also pumped €30m into its St James’s Gate Brewery to increase output of Guinness 0.0.
Offloading the brand now would likely be perceived as a major gamble by Diageo CEO Debra Crew and new CFO Nik Jhangiani.
As well as reviewing Diageo’s drinks portfolio, the pair are said to be considering cutting the group’s growth targets amid cooling demand for spirits in China and the US. Presently, Diageo maintains it expects annual growth of between 5%-7% in the mid-term, despite having seen sales fall 0.6% organically last year.
Diageo’s share price has slid some 27% since Crew’s appointment around 18 months ago.
The group is set to report results for its fiscal first half next month.
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