Diageo share price: Company focuses on North American whiskey

UK-based drinks giant Diageo (LON:DGE) plans an aggressive global push for its North American whiskey brands next year aiming to take advantage from the fast growing market for US-made brown spirits, The Wall Street Journal reported.

The world's biggest spirits maker is planning marketing and advertising campaigns to significantly boost the sales of its Bulleit Bourbon, a little-known Kentucky whiskey with a hipster aura, Crown Royal Canadian whiskey and George Dickel Tennessee whiskey. It also intends to launch two new bourbon brands next year.

According to data by Pernod Ricard, one of Diageo’s major rivals, the whisky segment is enjoying a renaissance, accounting for 49 percent of the total volume growth of the US spirits market.

North American whiskey, mainly consisting of bourbon, Tennessee and Canadian whiskeys, represents 61 percent of total whisky volume and is growing at a rate of 11 percent, driven by new styles and flavour innovations.

Specifically rye whiskey is outperforming, growing at 52 percent in volume and 88 percent in value.

According to data by market research company, Nielsen, US-made brown spirits accounted for 53 percent of the total growth in the $21 billion US spirits market in the 12 months to October 12.

Bulleit Bourbon and Crown Royal accounted for nearly half of Diageo’s US net sales growth in the fiscal year to the end of June, thanks to the fast starts of new offerings Bulleit 10-Year-Old and Crown Royal Maple Finished. Now Diageo intends to launch Bulleit, known for its high rye content, in 14 markets outside the US, including Germany, Japan, and Brazil.

It hopes to sell more than one million nine-litre cases of the ‘hipster bourbon’ a year in the foreseeable future, up from 300,000 cases sold last year and compared to only 40,000 cases five years ago.

Diageo share price

Shares in Diageo rose 0.9 percent to 1,949p as of 13:49 UTC, benefitting from a widespread London rally spurred by increased optimism over an improving global economic outlook after the Fed decided to start winding down its economic stimulus programme. The blue chip FTSE 100 index was also up 0.9 percent at that time.

Analyst ratings

According to a survey of 36 analysts published by Analyst Ratings Network, Diageo has a consensus rating of ‘buy’ and an average target price of 2,161.83p. Twenty three research analysts have a ‘buy’ rating on the stock, eleven have it as a ‘hold’, and two call it a ‘sell’.

As of 13:37 UTC buy Diageo shares at 1,950.50p.

As of 13:37 UTC sell Diageo shares at 1,949.50p.

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