After an eight-month, three-step investment process, Diageo, the world’s largest distiller, has declared itself “the major shareholder” in United Spirits, the company that controls nearly 60 per cent of India’s drinks market.
But is that quite fair? “Major” shareholder? With a 25.02 per cent stake, Diageo still falls well short of majority shareholding and that creates questions around control.
At between 4-5 litres a year, Ethiopia’s beer per capita consumption is one of the lowest in the region. Yet its market has doubled over the last five years thanks to its growing population, urbanisation and rising incomes. All this is proving to be an irresistible draw for global brewers – with Heineken the latest to announce plans to build a new $156m brewery in the country.
With confidence tanking across western economies, it’s no surprise that the world’s biggest consumer-facing industries have been looking elsewhere for growth. And it was more of the same for Diageo on Thursday, as it announced that its strongest sales and profits increases for the last half year came from developing countries.
The maker of Baileys and Guinness saw global sales grow 5 per cent to £6.04bn over the second half of 2012, with operating profits up 11 per cent to £2.05bn. But its fastest growth rates came from Africa and Latin America, as emerging consumers pour back its international spirit and local beer brands.
From its distilleries in deepest Scotland, Diageo has got one eye on Africa. The world’s biggest drinks company has been pushing its Scotch whisky brands on the continent and its efforts are paying dividends.
Buoyed by a series of marketing campaigns featuring local celebrities – including Ethiopian Olympic champion Haile Gebrselassie – Diageo’s sales of the spirit in Africa grew by 20 per cent in the last financial year, led by its famous blended Scotch brand Johnnie Walker, which shot up by a whopping 40 per cent over the period.
When, in a traditional Mexican cantina, it’s time for one for the road, drinkers ask for las penúltimas. It’s best not to tempt fate by calling the last drinks las últimas, simply because they might be the last ever.
A similar logic could be applied to Diageo’s efforts to acquire the world’s leading tequila maker, José Cuervo. Both companies have announced that the talks have irretrievably broken down. But some observers are not prepared to accept that the long-running saga is now finally over.
Shares in United Spirits rallied 34.7 per cent on Monday reaching a multi-year high of 1,832.95 rupees, in a wave of relief that a long-awaited deal seems finally to be going ahead.
After Mumbai’s markets closed on Friday, the world’s largest spirits company, Diageo, formally announced it will pay £1.2bn to take a 53.4 per cent stake in the Indian drinks group.
It looks like Vijay Mallya may finally have been thrown a lifeline for his embattled Kingfisher Airlines. But will it be enough?
After four long years of discussions, rumours and speculation, Diageo, the world’s largest spirits company, agreed on Friday to buy a 53.4 per cent stake in his flagship United Spirits for more than $2bn. The attraction is obvious: Diageo gains great access to India’s 1.2bn consumers and the world’s biggest whisky market. But for Mallya, the stakes are even higher.
Diageo, the drinks producer behind brands such as Smirnoff and Johnnie Walker, is booming in emerging markets. Q1 sales growth figures, reported on Wednesday, show an expansion of 16 per cent in Latin America and the Caribbean, and 11 per cent in Africa.
How do you toast the victory of Hugo Chávez, Venezuela’s socialist president, who last Sunday won another six-year term, reconfirming him as one of Latin America’s most commanding political figures?
Not, perhaps, with Scotch, beer, or coca-cola. Indeed, the manufacturers behind virtually every international drink are more likely to be in the doldrums over the news than in celebratory mood.
For the better part of a year, rumours have floated that billionaire Indian liquor baron Vijay Mallya was on the verge of saving one of his troubled companies by selling a stake in another. But which one?
After lots of rumours of deals involving his companies United Spirits, United Breweries and Kingfisher Airlines, a change in credit rating may force his han.
What’s going on in the so-called negotiations between Indian entrepreneur Vijay Mallya and Diageo over Diageo possibly buying a stake in Mallya’s drinks company United Spirits? With United Spirits shares shooting up recently, the two companies on Tuesday issued a statement confirming that they were in discussion about “possible transactions” with “no certainty” of a deal.
But that’s not new. Daigeo chief executive Paul Walsh said as much last month. And plans for a deal date back to 2008. Probably the two sides have simply decided to get the facts on the record before the flamboyant Mallya takes the stage this week at annual meetings for his three key companies – United Spirits, United Breweries and Kingfisher Airlines. As beyondbrics has reported, shareholders are likely to give him an uncomfortable time.
Alcoholic drink maker Diageo released some impressive results this week on the back of continued strong performance in emerging markets, which now account for almost 40 per cent of the company’s revenues.
Today, East Africa Breweries (EABL), which is 50-per-cent owned by Diageo and is Kenya’s largest company by market capitalisation, released its full-year results, allowing a closer look at conditions in one of Diageo’s fastest-growing regional markets.
With the World Cup and Olympics heading for Brazil in the next four years, it looks an opportune time to buy into Brazil’s national spirit.
Diageo, the globe’s biggest spirits company, has bought Ypióca and some production sites from Ypióca Agroindustrial Limitada for R$900m ($453m), giving it a foothold into the world of the caipirinha.
When it comes to selling things that take years to mature – like premium cognacs or Scotch whiskies – it pays to take the long view. Diageo is taking a very long view on the future of baijiu, otherwise known as Chinese firewater.
As a purveyor of Scottish firewater – also known as Johnnie Walker – Paul Walsh, Diageo’s CEO, says he can foresee a day when Chinese white spirit will have as broad a global footprint as Scotch whisky. To prepare for that day, Diageo said on Tuesday it would shortly launch a mandatory tender offer to spend as much as $1bn buying all remaining shares of Sichuan Shuijingfang, the baijiu company it took control of last year.
African beer is big business and every brewer you can name is looking to gain a foothold in its fast-growing markets. Diageo, which already sells more Guinness in Nigeria than it does in Ireland, this Tuesday confirmed it has once again upped its presence on the continent by buying Ethiopian state-owned brewer Meta Abo for $225m.