Diageo stock (DEO) fundamentals, overview
Diageo plc is a British multinational drinks company formed on 1997 December 17 from the merger of Guinness plc and Grand Metropolitan. The company is headquartered in London and employs approximately 30000 people worldwide. It sells more than 200 brands in nearly 180 countries and has annual revenues in excess of US$20 billion, making it a leading player in the premium drinks market.
Its best-known brands include whiskies such as Johnnie Walker, J&B, Buchanan's, beers such as Guinness, and spirits such as Smirnoff vodka, Baileys cream liqueur, Captain Morgan rum, Tanqueray gin, Don Julio tequila. Its main competitors in the global premium drinks industry are Pernod Ricard, LVMH and Rémy Cointreau, as well as smaller, dynamically growing craft and premium drinks producers at the regional level. Interestingly, it is present as a strategic partner and competitor in its joint champagne and wine market activities with Moët Hennessy, owned by LVMH.
Market capitalization: GBP 40.7 billion
Investor relations: https://www.diageo.com/en/investors
iO Charts share subpage: DEO
📒Table of Contents📒
I have created a table of contents to make it easier for you to navigate the longer articles:
- Diageo (DEO) Specialties
- How does Diageo (DEO) make money and what market advantages does it have?
- Diageo (DEO) metrics
- Diageo (DEO) acquisitions
- Diageo (DEO) management
- Competitors: Diageo (DEO) opponents
- What risks does the Diageo (DEO) ?
- Diageo (DEO) valuation
- Major news and the last quarter
- Other interesting facts about Diageo (DEO)
〽️Market segment analysis〽️
In this section, I examine the dynamics of the market segment, how it operates, who the main players are, and what tailwinds or headwinds the players in the given market have to deal with. I will not analyze companies in depth, but I will touch on the market share of individual companies.
Alcohol consumption and the production of fermented beverages in general are almost as old as humanity. Although the mechanism of production has developed a lot in technological terms, the end product itself has essentially remained unchanged for centuries. It is a very traditional industry, where brand power plays a huge role, most companies trace their origins back hundreds of years. This is a very mature, stable segment, it is not for nothing that it is called the defensive consumption sector. Basically, the alcohol market, which is a 1.7 trillion USD segment per year according to Grand View Research (Alcoholic Drinks Market Report), is made up of large, concentrated players, but this is also divided into sub-segments. Since the pricing power of these alcohols differs, some companies have tried to separate themselves from each other. According to this, there are:
- market for distilled spirits: vodka, whiskey, including Tennessee, Scotch, cognac, gin, tequila, etc.
- wine and champagne market
- low-alcohol beverages, such as beer, seltzer, etc.
💡Of the above, the greatest pricing power is in premium spirits, including those that were distilled many years earlier.
For example, after Johnny Walker Red Label, comes Black Label, then Blue Label, which have much higher profits than their lower-priced equivalents. Of course, there are also premium-priced products in the beer market, Guinness is typically one of them.
One of the characteristics of the premium spirits market is that it is more cyclical than, for example, the beer market, as drinking alcohol is not a necessity, which is why consumers tend to postpone purchasing premium beverages. It is also worth separating companies according to each subsegment:
- alcoholic beverages: Diageo (DEO), Brown-Forman (BF-B), Remy-Coientreau (RCO), Pernod Ricards (RI), LVMH (MC) with Henessy cognacs
- low alcohol drinks: AB In-Bev (BUD), FeverTree etc., Diageo (Guinness)
- champagne: LVMH-Diageo (Moet)
A common feature of the big guns of the spirits market is that each company has a wide moat, practically a few large players dominate the market, unlike, for example, beer manufacturers, where everyone makes craft beer and builds plants. Another thing that follows from this is that entering the spirits market is significantly more complicated than just making beer. The reason for this is the following:
- tradition (or lack thereof): A reliable, premium brand that is difficult to reproduce is very important to consumers.
- production process: Since there are many decades of maturation processes here, the alcohols have to be stored, and the end result, if there is a mistake in the process, is quite unpredictable. In other words, it depends not only on the right raw materials and storage capacity, but also on expertise.
- distribution network: Getting the right products to the right customers is not that easy. A Johnnie Walker Blue Label costs $200, consumers won't buy it from the corner store, but there are even more expensive products, the most expensive JW is almost $30000!
☝🏻Spirits are a mature market, meaning that relatively small but stable volume growth and price increases are to be expected. In the longer term, low single-digit growth of 3-5% is to be expected in the premium segment.
The market is dominated by established stars, the emergence of disruptive technologies is unlikely, because there is no real way to break it, the method has been the same for hundreds of years, and the lack of tradition for new names prevents them from breaking into the market. Within the entire alcohol market, the spirits subsegment is growing faster than the others, and within this, the growth of premium brands is even greater.
The figure below is worth looking at, which shows that although alcohol consumption is decreasing overall, it is being heavily premiumized. As people become wealthier and the population expands, so does the amount of premium alcoholic beverages purchased. This also means that each sub-segment is growing at a different rate compared to the aggregate growth of 3-5%.
🥂Annual growth of alcoholic beverage categories
| Segment | CAGR (%) | Comment |
|---|---|---|
| RTD cocktails | 15.4 | Outstanding growth, premium RTD pull |
| Canned/boxed alcoholic beverages | 11.7 | A prominent trend in the USA and APAC regions |
| Premium alcoholic beverages | 10.2 | The main driver of premiumization |
| General RTD drinks (average) | 7.1 | Average growth across the entire RTD category |
| Total alcohol market (average) | 3.5 | Stable but moderate market |
| Non-premium, mass-market drinks | 1.0 | Saturated, low-margin segment |
| Low-end spirits | -0.5 | Displaced due to the rise of quality drinks |
This is supported by the second table, which is also shown in the IWSR 2025 study (5 shifting trends in the Alcohol Market) that the higher the prestige of the product, the more its segment grows. You can see the expansion of the other segments in the summary table below.
🍷Growth of alcoholic beverage categories
| Segment | Volume CAGR | Value CAGR | Trend / Note |
|---|---|---|---|
| non-alcoholic beverages | +7% | - | Strong growth |
| RTD | +2% | +5% | Premium RTD pull |
| Tequila | +2% | +3% | Growing globally |
| Scotch whiskey | +4% vol. | - | India, Turkey |
| Premium-plus beer & cider | +2–3% | - | Mature growth |
| Wines | –1% | - | Declining volumes can be saved by the premium segment |
| Total TBA market | –1% vol. | +3% value | It grows mainly in developing regions |
In contrast, the “prestige plus” category could grow by up to 15% according to a previous IWSR analysis, which is a huge difference compared to traditional categories. Diaego (DEO) and Brown-Forman (BF-B) are most interested in the super-premium/ultra-premium/prestige/prestige plus categories.
🥃IWSR price ranges for spirits
| Price category | Retail price (75cl USD) | Features |
|---|---|---|
| Value (default) | <$23 | Entry level, mass market, low margin |
| Standard | $10-$25 | Average quality, traditional brands |
| Premium | 25-31 USD | Tangible quality improvement, the beginning of premium brands |
| Super-Premium | > 31 USD | For committed premium consumers and trend followers |
| Ultra-Premium | $45-100 | Luxury level, limited editions, artisan quality |
| Prestige & Prestige Plus | Prestige: $100-$199 Prestige Plus: >$200 | True luxury products – high status, exclusive channels |
What do we consider a premium spirit? On the one hand, that which is justified by its pricing, and on the other hand, where the quality of the materials used and the length of the maturation process justify it. A very good example of this is the Johnny Walker brand owned by Diageo (DEO), whose products can be classified as shown in the table above, this is called the price ladder. As you can see, the price increases proportionally with the maturation time, because the supply is much narrower and the prestige is greater:
🍾Price ranges of Diageo Johnny Walker products
| Product | Price category (IWSR) | Maturation time | Approximate price (USD) |
|---|---|---|---|
| Red Label | Standard | none (NAS) | $25 |
| Black Label | Premium | Year 12 | $40 |
| Green Label (15 Years) | Premium | Year 15 | $65 |
| Aged 18 Years / Platinum Label | Super Premium | Year 18 | $90 |
| Blue Label | Ultra-Premium / Prestige | mixed (25–60 years) | $ 180 – 450 |
| Master's Edition 50 yo | Prestige Plus | Year 50 | $25000 |
The bottom line is that the more expensive a spirit is, the greater the growth you can expect in the long term. Not to mention that even if it doesn't lead to alcoholism, drinking alcohol definitely causes a pleasant feeling, so it has a strong retention effect.
Finally, an interesting fact from a previous MorningStar analysis: price and cost advantages can be achieved not only through plant size, but also by a premium product creating its own niche market, which is built around a specific brand that no one else can reproduce:
"Small brands can command a price premium, depending on scarcity and the consumers' perception of product quality. For example, The Balvenie is a Speyside single malt, the second largest brand of privately held William Grant & Sons, behind Glenfiddich. Its volumes are roughly half of those of The Singleton, Diageo's comparable single malt. The Balvenie 12 Year-Old, a Speyside single malt, retails at a 67% price premium to The Singleton 12 Year-Old, according to our sample data. Very little financial data is available for William Grant & Sons, but a healthy 16% net income margin, according to PitchBook, indicates that the much smaller business is almost as profitable as Diageo, which generates a net income margin in the low-20% range."
The above seems extremely positive, but it is worth looking at the headwinds and tailwinds that companies competing in the alcohol market have to deal with. What is clearly visible is that the market for beers and wines in the standard segment, which are consumed in large numbers by average people, is shrinking, while the market for premium alcohols is growing. This dual effect may have arisen due to the following:
❌Headwinds in the alcohol market
- ❌sin stock: Many people do not like to invest in stocks that are not socially useful or harmful. These include the alcohol and tobacco industries, the extraction of polluting raw materials such as the oil industry, addictive substances such as alcohol, cannabis, gambling, or the weapons industry geared towards destruction.
- ❌Alcohol consumption is decreasing and a healthy lifestyle is becoming more popular: The health-damaging effects of alcohol are proven by countless studies. Since exercise and a healthier diet are constantly gaining ground, alcohol consumption does not really fit into this, and in addition, the partially positive effect of wine, its antioxidant status, seems to be declining, but at least it is controversial as an advantage. As for reduced alcohol consumption, this is not only related to a healthy lifestyle, but also a generational issue: members of Generation Z simply consume less alcohol. They are currently the age group in their 30s, who are now reaching the peak of their salaries and careers.
- ❌Alcohol purchase is a deferred expense: In an uncertain economic situation, consumers postpone their consumption, this is especially true for more expensive spirits, unlike cheap beer and wine, which fluctuate much less.
- ❌GLP-1 drugs: GLP-1 drugs, such as Eli Lilly's products (LLI) and Novo Nordisk's Ozempic, Wegovy, Mounjaro – Novo Nordisk stock analysis) poses a real risk to alcohol consumption and, with it, the entire alcohol industry. This is not just speculation: IWSR, Morgan Stanley and LVMH have already reacted to this trend. To put it very simply, these are drugs that act on the brain's reward system. They dull dopamine receptor pathways, so the desire for alcohol is reduced, similar to overeating or smoking.
✅Tailwinds in the alcohol market
- ✅tradition: A tradition that can be traced back hundreds of years does not really wear out. The prestige of a brand name that is hundreds of years old only grows stronger over time and feels more and more premium.
- ✅the rise of alcoholic beverages at the expense of other types of beverages: It's an interesting question why this happens, but typically the consumption rate of vodka/tequila/cognac/rum increases at the expense of the others. I don't see this connection as so clear, it's possible that, for example, beer consumption would decrease even if the consumption of soft drinks didn't increase.
- ✅the number of wealthy people is increasing: The world is becoming more and more wealthy and this wealth is distributed relatively unequally. The wealthy are more likely to buy higher-priced alcohol than the poorer classes. Moreover, these actors are less likely to curb their consumption in a recession, because their income is higher. But importantly, there are two types of products in the premium and luxury market: soft and hard luxury goods, the former of which includes alcohol. Soft luxury products typically provide consumable, wearable, experiential luxury that wears out or runs out over time. These are less resilient to economic recession.
- ✅representative tool: There are many countries, such as China, where it is a matter of prestige in business to choose the alcohol they offer their customers. For example, Kweichow Moutai, which only sells premium Chinese drinks, sells them. In many cases, these players cannot afford not to buy such products when making a deal.
Comparing the two, it can be seen that manufacturers with little pricing power face much greater competition than prestige manufacturers and grow at a slower rate, and in fact, often decline, than players in the premium segment. Based on this, four+1 companies and premium brands can be highlighted in the market:
🪧The most important premium alcohol companies
| Company | Main premium alcohol brands |
|---|---|
| Diageo (DEO), English | Johnnie Walker Gold & Blue Label, Lagavulin, Talisker, Mortlach, Don Julio, Tanqueray No. TEN, Cîroc, Ketel One, Ron Zacapa, Baileys Luxe, Guinness |
| Brown-Forman (BF.B), American | Jack Daniel's Single Barrel, Woodford Reserve, Glendronach, BenRiach, Herradura, El Jimador, Diplomático, Finlandia, Gin Mare, Chambord |
| Pernod Ricard (RI), France | Chivas Regal, Royal Salute, The Glenlivet, Aberlour, Jameson, Redbreast, Martell, Havana Club, Absolut, Beefeater, Perrier-Jouët, GH Mumm |
| Kweichow Moutai, Chinese | Moutai Baijiu (Feitian, 15 Year, Prince, special reserve and limited editions) |
| LVMH (MC), France | Moët & Chandon, Dom Pérignon, Veuve Clicquot, Krug, Ruinart (champagne), Hennessy (cognac), Glenmorangie, Ardbeg (single malt whisky), Belvedere (vodka), Volcan De Mi Tierra (tequila), Château d'Yquem (wine) |
In fact, it is quite difficult to buy Chinese Kweichow Moutai directly, but the other 4 companies should definitely be considered by any investor thinking about the premium alcohol market. However, LVMH is actually a conglomerate, alcohol accounts for a small part of its revenue, so investing in the alcohol market is probably not the easiest way to do it.
🙋♂️Diageo (DEO) Specialties🙋♂️
In this section, I examine what specialties the analyzed company has, what its position is in the market, and whether it does anything differently than its competitors. If so, what and how, and what impact does this have on their operations.
Diageo (DEO) is the world's largest alcohol holding company, similar to LVMH (MC.PA) in luxury clothing. Its main brands are Johnnie Walker (the world's largest-selling spirit) and the premium beer brand Guinness. Diageo (DEO) also owns the Tanqueray brand, the world's most famous gin, and Bailey's, the best-selling cream liqueur. As a holding company, acquisitions are commonplace, constantly eating up smaller competitors in the market and expanding its range.
Diageo (DEO) is a highly diversified company, marketing its products in countless countries around the world and, according to IWSR research, holding a leading role in most subsegments, and in those where it is not, it ranks second.
Diageo (DEO) has a joint venture with LVMH in the luxury brands Moet-Hennessy, where Diageo (DEO) holds a 34% stake in the company. Diageo (DEO) competes primarily with Brown-Forman (BF-B) (Brown-Forman stock analysis):
- whiskey segment: Woodford Reserve, Gentleman's Jack, Jack Daniels (BF-B) are the direct competitors of Diageo's (DEO) Johnny Walker, and their bottles cost roughly 40 USD.
- Tequila segment: Herradura (BF-B) competes with Tanqueray (DEO)
Diageo (DEO) categorizes its brands into different segments and publishes these in its annual reports, i.e. it's worth reading these.
Diageo (DEO) is aware that the volume of alcohol consumption is decreasing, so many of its product lines also have alcohol-free variants for those who like the taste of a particular product but do not want to suffer the negative effects of alcohol.
💰How does Diageo (DEO) make money and what market advantages does it have?💰
In this section, we examine what exactly the company does to generate revenue, what products and services it has, how indispensable they are. Does it have any competitive advantage (economic moat), how defensible is it, and whether the trend is decreasing or increasing, and what is likely to happen in the long term.
Diageo (DEO) makes its living selling alcohol, unsurprisingly. It sells premium alcoholic beverages, most of which are spirits and a smaller portion, Guinness, is beer. Since these alcohols must be produced from very high-quality ingredients, and premium and above-grade products must be aged for many years, one of Diageo's (DEO) biggest competitive advantages is the brewery and distillery capacity they possess. The company that owns the distillery and the storage capacity will be able to produce increasingly premium beverages in the long term.
Diageo (DEO) is most powerful in the Scotch whiskey market, with 30 distilleries, which is roughly 40% of the market, making it the market leader, while William Grant & Sons is third with 8%, making Diageo the market leader in the scotch segment. The largest distilleries are the following:
- 🏭Cameonbridge, 30 million liters of scotch per year
- 🏭Glen Ord: 11.9 million liters
- 🏭Caol Ila: 6.5 million liters
- 🏭Dufftown: 6 million liters
However, it should not be forgotten that there is also Tennessee and Canadian whiskey on the market, all of which are further sub-segments of the sub-segments. The latter is also brutally strong, with the 20 million liter capacity of the Crown Royal plant in St. Clair being one of the largest in the world. It is also important that single-malt distillation is more expensive and brand-building, while grain whiskey is the raw material for cheap, mass-produced whiskeys in blends. The profile of a distillery therefore also means a business and strategic difference: if they brew malt, they build a brand. If they brew grain, they make money from volume.
A dominance similar to that of the Scotch market is also true of the premium vodka market, where Diageo has a 62% share, and of various craft spirits, where it has a 27-28% market share. It is also the market leader in tequila distillation, so we can say that it is not only the world leader in sales, but also at the other end of the production chain.
🏭 Capacity and market share in specific terms
| Category | Significant infrastructure/capacity | Outstanding investments/facts |
|---|---|---|
| Scotch whisky (Diageo) | 30 distilleries in Scotland (28 malt + 2 grain); Cameronbridge grain 30 million liters/year; Diageo ~ 40% global scotch capacity | Port Ellen relaunch with £185m investment |
| Tequila (Diageo) | New Jalisco plants expand in Mexico | 25 million liters of tequila shipped to the USA annually with major capacity expansion |
| Vodka (Diageo + industry) | Diageo global vodka portfolio; industry size $50 billion last year, 5.4% CAGR | No specific distillery number, dominates the premium vodka market (62%) |
| Crown Royal (Diageo) | New Canadian distillery St. Clair, with a capacity of 20 M liters/year | Canadian whiskey capacity expansion |
| Craft spirits (global) | USD 21–30 billion market; North America 59% share | Large-scale growth: 27–28% CAGR, craft distilleries are growing rapidly |
Now let's look at exactly which type of alcohol Diageo (DEO) collects its revenue from and with what geographical distribution:
- 80% spirits, of which
- Scotch 24%
- Tequila: 11%
- Vodka: 9%
- Canadian whiskey: 6%
- Rum: 5%
- Liqueurs: 5%
- Gin: 5%
- IMFL whiskey: 4%
- US whiskey: 2% (I think Tennessee, but Brown Forman is stronger here)
- Other: 9%
- 16% beer, mainly Guinness
- 4%, ready to drink, i.e. the number of pre-mixed drinks
However, the above does not tell the whole story of which drink can be classified into which category, i.e. how premiumized the given product is. Naturally, the premium/super-premium/ultra-premium/luxury/super-luxury levels matter, while the mass/standard categories sold in large volumes are actually the products of Diageo's (DEO) range intended for everyday consumption.
Total revenue last year was £20.2 billion. Here are some examples (percentages represent revenue):
- luxury ($250+): 4%, Johnny Walker Blue label Ultra, Brora, Port Ellen, Ghost and Rare, Justerini & Brooks
- ultra-premium (up to $250): 5% Johnnie Walker Blue Label, Ciroc, Zacapa, Cas Amigos (George Clooney) Tequila, etc.
- super-premium ($40-100): 16%, Singleton
- premium ($25-40): 37%, Johnnie Walker Black label, Bailey's, etc.
- standard and below ($0-25): 38%, Johnnie Walker Red Label, Smirnoff, Captain Morgan (rum), Black&White, etc.
source: Diageo (DEO) annual report, price levels of individual products
From the above, it can be seen that approximately 1/3 of the revenue comes from standard and premium, while approximately 1/4 of the revenue comes from super-premium or higher quality products. As an investor, the beneficial trend is if the proportion of premium and more expensive products increases. I only found indirect data on this, but it is still telling: The product portfolio is shifting towards higher quality products, which is particularly welcome.
As you can see, the higher a product is priced within the brand, as the customer moves up the price ladder, the greater the profit achieved on a given bottle, which in this case culminates in the 94% value of Johnny Walker Blue Label Special. Two things follow from this: the company needs to shift its product mix towards premium products as much as possible, and secondly, this is a very lucrative business model, as the premium product does not incur many extra costs, while its price is many times higher than the basic product. In other words, the price and cost increases are not proportional.
It is worth saying a few words about some of Diageo's (DEO) product lines, as this is how you can truly understand what makes Diageo (DEO) so strong in the alcohol segment and why it is so difficult for competitors to take away its market share.
Diageo's scotch whiskey segment (24% of revenue)
Diageo has 30 distilleries in Scotland, and the country reportedly has 22 million barrels of whiskey, of which 17 million are owned by Diageo (DEO). A new barrel of whiskey can sell for between £250 and £500, but the most expensive barrel from the Ardberg distillery sold for £16 million. This means that the whiskey in the barrel stock alone could be worth between £5 and £10 billion. This also represents a very crude monopoly, as Diageo owns 77% of Scotland's total capacity. Johnny Walker Red Label is the world's best-selling whiskey, with 259 million bottles sold last year, up from 224 million eight years earlier. JW was the world's 10th most valuable spirits brand in 2022 (World's Most Valuable Spirit Brands).
🥃 Top 10 whisky brands by global volume (9 L carton, 2024)
- McDowell’s (Indian whiskey - United Spirits, Diageo) – ~ 31.4 million cartons
- Royal Stag (Indian whisky – Pernod Ricard India) – ~ 27.9 million cartons
- Officer’s Choice (Indian whiskey – Allied Blenders & Distillers) – ~ 23.4 million cartons
- Imperial Blue (Indian whiskey - Pernod Ricard India) – ~ 22.8 million cartons
- Johnnie Walker (Scotch – Diageo) – ~ 21.6 million cartons
- Jim Beam (Bourbon – Beam Suntory) – ~ 16.7 million cartons
- Jack Daniel's (Tennessee – Brown‑Forman) – ~ 14.6 million cartons
- Jameson (Irish – Pernod Ricard) – ~ 11.1 million cartons
- Ballantine's (Scotch – Pernod Ricard) – ~ 9.2 million cartons
- Chivas Regal (Scotch – Pernod Ricard) – ~ 4.6 million cartons
Unit of measurement for all alcohol: 9 liter carton, which means 12 0.75 bottles
Diageo beer segment (16% revenue)
Guinness is Diageo's second largest brand and one of the most traditional alcohol brands. It is distributed in 100 countries and brewed in 50 countries, selling 850 million litres last year. Last year, it also produced significant organic revenue growth of 15% and volume growth of 5%. The Guinness business operates on a significantly lower margin than whiskey. Around 50% of beer consumption comes from former British colonies in Africa. For example, Nigeria overtook Ireland in beer consumption in 2007.
🍺 Top 10 beer brands by global sales (9 L carton)
- Snow Beer (China Resources) - 1 billion cartons (~9 billion liters) – the world's largest beer brand by volume
- Budweiser (AB InBev) – ≈ 230 million cartons
- Heineken (Heineken NV) – ≈ 130 million cartons
- tsingtao (Tsingtao Brewery) – ≈ 100 million cartons
- Corona (AB InBev) – ≈ 95 million cartons
- Carlsberg (Carlsberg Group) – ≈ 65 million cartons
- Coors Light / Miller Lite (Molson Coors) – ≈ 55 million cartons
- Asahi Super Dry (Asahi Group) – ≈ 45 million cartons
- Yanjing (Beijing Yanjing Brewery) – ≈ 40 million cartons
- Guinness (Diageo) – ≈ 13 million cartons – premium stout, yet in the top 10
Diageo's tequila segment (11% revenue)
The two big names are Don Julio and Casamigos. The leading tequila brands are Jose Cuervo and Bacardi Patron, with Diageo having traded ownership of the Bushmills Irish whiskey for the Don Julio tequila brand in 2013. In 2017, Jose Cuervo sold 11.7 million barrels per year, while Bacardi Patron sold roughly 5.1 million barrels. In the same year, Diageo (DEO) acquired Casamigos for $1 billion, selling 100000 9L barrels eight years ago, 1 million four years ago, and 3.2 million two years ago. Last year, the tide turned and they saw a 21% drop, but their growth is still impressive.
In 2013, Diageo (DEO) acquired the ultra-premium tequila brand DeLeon, which it co-owns with rapper Sean “P Diddy” Combs, as well as the Ciroc vodka brand. It has low volume but ultra-high pricing.
🌵 Top 10 tequila brands (9 L carton, 2024)
- José Cuervo (Proximo Spirits – Beckmann family) – ≈ 4.92 million cartons
- Don Julio (Diageo) – ≈ 3.33 million cartons
- Boss (Bacardi Limited) – ≈ 2.33 million cartons
- Casamigos (Diageo) – ≈ 1.96 million cartons
- 1800 Tequilas (Proximo Spirits – Beckmann family) – ≈ 2.05 million cartons
- Grand Centenary (Proximo Spirits) – ≈ 0.27 million cartons
- Little ovens (Suntory / Brown-Forman) – ≈ 1.57 million cartons
- Espolón (Campari Group) – ≈ 1.58 million cartons
- El Jimador (Brown-Forman / Herradura) – ≈ 1.30 million cartons
- Olmec Highlands (Proximo Spirits) – (Specific quantity not public, but it was in the top 10 last year)
Diageo vodka segment (9% revenue)
Their best-selling brand is Smirnoff, which is also the world's number one vodka brand. In 2022-2023, 26.5 million barrels of it were sold, which is more than double the 11 million barrels of Absolut vodka. Smirnoff has entered the so-called alcopop segment with flavored vodkas, as well as the hard seltzer market, which is the market for carbonated alcoholic soft drinks. Diago (DEO) also co-owns the Ketel One brand, one of the world's best-selling vodka brands.
🌍 Top 10 largest vodka brands (2024)
- Smirnoff (Diageo) – 24.4 million cartons
- Absolut (Pernod Ricard) – 12.7 million cartons
- Tito's Handmade Vodka (Independent, Tito Beveridge – Fifth Generation, Inc.) – 12.2 million cartons
- Khortytsa (Global Spirits, Ukraine) – 11.2 million cartons
- Morosh (Global Spirits, Ukraine) – 10.3 million cartons
- Hlibny Dar (Bayadera Group, Ukraine) – 10 million cartons
- Żubrowka (CEDC International / Maspex Group – Poland) – 9.5 million cartons
- Magic Moments (Radico Khaitan, India) – 7.1 million cartons
- New Amsterdam Vodka (E. & J. Gallo Winery, USA) – 4.9 million cartons
- Arkhangelsk (Beluga Group, Russia) – 4.7 million cartons
Rum (5% revenue)
Names worth mentioning: Captain Morgan, one of the most well-known in the world and owned by Diageo (DEO) since 2001. In 2023, Diageo (DEO) also bought Don Papa Rum for EUR 260 million, which is a premium product and can compete with brands such as Havana Club.
🍹 Top 10 rum brands by global sales (9L cartons, 2023–24)
- Tanduay (Filipino Sugarcane Rum – LT Group) - 27.5 million cartons
- Bacardi (Molasses-based/rum – Bacardi Limited) - 21.1 million cartons
- Captain Morgan (Caribbean spiced/white rum – Diageo) - 12.9 million cartons
- Havana Club (Cuban-style rum – Pernod Ricard / Bacardi shared) - 4.6 million cartons
- Contessa (Indian rum – Global Spirits) - 1.3 million cartons
- Barceló (Dominican rum – Ron Barceló SRL) - ~2.7 million (based on top 10 data)
- Appleton Estate (Jamaican rum – J. Wray & Nephew / Campari Group) - 1.1 million cartons
- Mount Gay (Barbados rum - Rémy Cointreau) – (strong global volume in 20–25 countries ≈ 1–1.5 million cartons)
- Brugal 1888 (Dominican rum – Brugal & Co.) – (top premium Dominican brand – about 1 million cartons)
- Rum Barcelo is already in 6th place, but if we were to prioritize other premium brands, Foursquare (Barbados) or Don Papa (Diageo) could both be here: Around 0.9–1.2 million cartons
Gin (5% revenue)
The world's two largest gin brands are owned by Diageo (DEO), Gordon's and Tanqueray. Since 2017, Gordon's Pink Gin has been the best-selling gin in the UK. In 2020, they bought Aviation from Ryan Reynolds for $335 million.
🍸 Top 10 gin brands by global sales (9 L carton, 2024)
- Gordon's (Diageo) – ≈ 7.0 million cartons – classic London Dry, the world's largest volume gin
- Tanqueray (Diageo) – ≈ 3.0 million cartons – London Dry gin, strategic brand
- Bombay Sapphire (Bacardi Limited) – ≈ 2.4 million cartons – premium London Dry
- Beefeater (Pernod Ricard) – ≈ 1.8 million cartons – iconic London Dry
- Hendrick's (William Grant & Sons) – ≈ 0.59 million cartons (US sales) – super-premium distilled cucumber-rose gin
- New Amsterdam (E. & J. Gallo Winery) – (Top 5–6 on volume lists) – modern, mix-friendly gin
- Monkey 47 (Black Forest craft gin) – (Craft premium, trendy, in the top 10 by volume)
- Roku (Suntory – Japanese gin) – (fast growing, top 10 globally)
- The botanist (Bruichladdich Distillery, Islay) – ≈ 0.1–0.2 million cartons – handcrafted premium gin
- Boatyard (northern craft gin) – (re-entered the top 2–3 trend lists, also top 10 by volume)
Liqueurs (5% of revenue)
The most well-known name is Bailey's. The brand was founded in 1974 and two decades ago had sold 7.4 million cases. Ten years ago, the same number was 6.3 million cases, and sales have grown to 8.2 million last year. The liquor market has been stagnant for 10 years, so they have introduced new flavors, including vegan alternatives, to boost sales.
🍸 Top 10 liquor brands by global sales (9 L carton, 2024)
- Baileys (Diageo) – ≈ 8.2 million cartons
- Disaronno (Illva Saronno / Gruppo Illva) – ≈ 3.5 million cartons
- Kahlua (Bacardi Limited) – ≈ 3.3 million cartons
- Grand Marnier (Rémy Cointreau) – ≈ 2.8 million cartons
- Cointreau (Remy Cointreau) – ≈ 2.5 million cartons
- Chambord (Pernaud Ricard) – ≈ 1.2 million cartons
- Jägermeister (Mast-Jägermeister SE) – ≈ 1.1 million cartons
- Bols (Lucas Bols BV) – ≈ 1 million cartons
- Ricard Pastis (Pernod Ricard) – ≈ 0.6 million cartons
- Goldschläger (Sazerac Company) – ≈ 0.5 million cartons
As you can see from the lists above, Diageo (DEO) is a very diversified company, with its revenue coming from a relatively large number of areas, but not all of these regions consume the same alcohols.
🏰Economic moat🏰
In this segment, I examined whether the company has any economic competitive advantage, which Warren Buffett referred to as the “economic moat,” which keeps competitors from besieging the company’s fortress, i.e. its business, and taking over its market. In the case of Diageo (DEO), these could be the following:
- 🫸Cost/scale advantage: yes. This is the largest company in the market, its closest competitor is Brown-Forman (BF-B, Brown-Forman stock analysis), which is much smaller than Diageo (DEO). However, economies of scale only partially justify the competitive advantage, since if it were the only thing that mattered, it would also be reflected in the higher pricing power and margins of Anheuser-Busch InBev and Heineken. However, these are destroyed by Diageo (DEO), so the quality component probably matters more.
- 🫸Switching cost: somewhat yes. This is simply the retention power of premium brands, but since these are not essential consumer products, they are easy to replace. Of course, the experience factor itself weighs heavily, for example, if I like Jack Daniels, which is a Tennessee whiskey, I will not drink scotch. However, there is nothing limiting the consumer from buying Brown Forman (B-FB) cognac and Pernod Ricard (RI) liqueur in addition to Diageo's (DEO) whiskey.
- 🫸Network effect: none.
- 🫸Intangible assets, know-how, trademark: yes. Brand power and manufacturing know-how are also difficult to replicate, as are the heritage of brands. Consider that there are brands that are over 200 years old.
- 🫸Barriers to entry: high. It is not only expensive, but also problematic to enter the market, because you can't just create a name of the level of Johnnie Walker from scratch. The distribution network has to be built, and the products have to be distilled for years. It is very similar to the power of luxury brands, in that the launch costs a lot, it is simply not worth investing the capital and time. There is also another advantage of the big alcohol companies that I have not seen in any other company: the impact of revenue shifts from increased maturation time. In other words, if a new competitor wants to enter the premium alcohol market, they will have to come up with a long-aged product, which will only be available 12/18 or even 50 years from the moment of entry, since this is the length of the maturation process.
Overall, I think this is a mature company with a wide moat, which is expanding very slowly, and it is not very possible to break this trend. However, it is also telling that while Diageo (DEO) is the market leader in many areas, it has a few similarly sized competitors, such as Brown-Forman (BF-B), Pernod Ricard (RI) and LVMH (MC.PA), so the market is fragmented, which is both a good and a bad thing. It is difficult to establish total dominance, but smaller players can be bought up.
🎢Diageo (DEO) metrics🎢
In this section, I examined what metrics characterize the company, how it stands on the revenue side, what margins it operates with, whether it has debt, what the balance sheet shows. I look for items that are extreme – too high debt, high goodwill, etc. - what return on capital the company works with, what its cost of capital is, how the revenue and cost sides are structured. I also examine trends, owner value creation, and how the company uses the cash generated.
📈What is the S&P 500 yield?📉
Compared to previous tests, I have introduced a new section to compare the metrics below. Since many people use the US stock market index as a benchmark and also buy S&P 500 ETFs, it is worth looking at what companies are doing in aggregate (of course, you should be happy if the company you are analyzing exceeds these values).
S&P 500 2024 data:
- SP&500 revenue growth: +7%
- SP&500 profit growth: +10%
- SP&500 gross margin: 45%
- SP&500 net margin: 13%
- SP&500 ROE: 15%
- S&P 500 ROIC: 12%
- S&P 500 ROCE: 11%
In the alcohol market, the largest companies, which already have economies of scale, typically do not have to reinvest too much into maintaining their business. Not as little as the software industry, but it is not as capital-intensive to maintain production as in the case of mining companies or other industrial players. I tried to include the data of Brown-Forman (BF-B) and Pernod Ricard (RI) in addition to Diageo (DEO), where this had some significance. For now, just note the numbers, we will return to this in the competitors section.
I've already touched on revenue for a few words, but let's take a closer look. It's worth paying attention to the trend, not much happened between 2015 and 2024 for Diageo (DEO), and current revenue has been practically stagnant since 2022. The same is not entirely true for profits, which have started to fall due to low volumes, currently at nearly 3.6 billion USD, the same as in 2021, but it has been higher in previous years.
Of course, that doesn't tell you much by itself, but if you look at the margins, you can see that they haven't really changed in years, as Diageo (DEO) isn't really growing either. Basically, this is a mature business segment, huge growth is not expected from the market, and therefore from the company either. All the margin metrics look like they were pulled on a string, with minimal fluctuation.
Let's draw the lessons:
- small increase, usually a few percent per year, currently minimal decrease
- If growth does not generate returns, dividends, share buybacks, and valuation will be the deciding factors.
So, based on the above, this is not a growth company. It is also worth knowing that companies in the alcohol industry accumulate quite a lot of physical assets, as they need distilleries, cellars, barrels, bottling plants, transport vehicles and a thousand other things that need to be purchased. Moreover, as you have seen before, Diageo (DEO) can often only ensure its growth through acquisitions, which causes a cash outflow. How can this be covered? Either from the cash generated or from loans, which end up in debt.
As you can see above, their net debt, which is the blue column, roughly matches their revenue, but they don't cover interest from that, but from profits. So, although I haven't had to deal with this much in my stock analyses so far, let's calculate debt, debt/EBITDA ratio, and interest coverage on loans based on the data at the end of 2024:
- Revenue: 20.27 billion USD
- net debt: $21.08 billion (103% of revenue)
- net debt/EBITDA: 3.2
- interest coverage, EBITDA/interest: 5.43
In addition to the above, there is one more important piece of information, which is not very positive:
💰 Bond issuance and debt growth
- In April 2025, Diageo (DEO) issued $1.5 billion in bonds, the proceeds of which are used for “general corporate purposes,” which often includes paying dividends. It’s a big question mark whether this is actually the case, as debt financing a dividend is almost always a very bad sign.
- The company's net debt is currently approximately USD 21 billion, bringing the net debt/EBITDA ratio to 3.2x, exceeding management's target range of 2.5-3x.
So it would take 3.2 years for Diageo (DEO) to pay off its debt if it used all of its pre-tax earnings. That's all well and good as long as there's revenue and profit, but I was just saying that sales are falling, which in itself is not that reassuring with such a large debt. Don't get me wrong: this has been the case for years, but the trend is getting worse, seven years ago debt was only 90% of revenue. Why won't Diageo (DEO) pay off its debt? Because then it wouldn't be able to pay dividends or buy back shares. So we can move on to the issue of value creation.
🧮What do ROIC and ROCE metrics show?🧮
ROIC – Return on Invested Capital – shows how efficiently the company uses its total invested capital to generate profit. Read more here.
- It shows the company's fundamental value creation capability.
- It filters out the impact of the financing structure.
- If ROIC exceeds the cost of capital (WACC), the company is creating value.
ROCE – Return on Capital Employed – shows how efficiently the company uses its long-term financing sources. Read more here.
- It measures the profitability of business activities.
- It does not take into account tax effects.
- A good basis for comparison between different industry players.
| Indicator | What does it measure? | Who is it useful for? | When is it considered good? |
|---|---|---|---|
| ROCE | Total return on capital | Long-term investors | If higher than the industry average |
| ROIC | Return on invested capital | Equity investors | If higher than WACC |
| ROE | Return on equity | Shareholders | If stable and sustainably high |
Let's bring in internal rate of return. The quality of a company is best demonstrated by what happens to the cash it generates, how it is reinvested, because in fact, the internal rate of return of companies determines in the long run whether they are able to create more and more value for their owners. How can this be translated into numbers?
If ROIC is greater than WACC, or the weighted average cost of capital, then the company is creating value, in this case it looks like this: 11.5%>6.5%. The trend is roughly the same over a 10-year period, with smaller or larger fluctuations, but ROCE fluctuates roughly between 15-17% and ROIC between 11-13%, while the return on capital is around 28%. This beats the S&P500, but we can see much higher values for some companies.
Finally, let's take a look at Diageo's (DEO) biggest competitor, Brown-Forman (BF-B) ROIC and ROCE values are practically identical to Diageo's own, and the WACC value is also similar. Based on these, it is not possible to decide which company is of higher quality.
Diageo (DEO) Ownership Value Creation
On the owner value side, I usually look at how the company uses the free cash generated. Basically, a company can do the following things with cash:
- funnel it back into the business
- reduces debt
- pays dividends
- buys back shares
- buys up other companies
The first scenario happens because Diageo (DEO) is maintaining its business, but has not reduced its debt much recently, which is a seesaw situation because debt repayment reduces it, while acquisitions increase it. As for the other items:
- Diageo (DEO) pays a dividend of 4.1% (last time it was this high was in 2009), with a payout ratio of 64%.
- Diageo (DEO) is also buying back shares, at around 1% per year
Based on the above, this means roughly 5-5.5%, which is added to the share price growth from earnings, which, based on the depressed valuation of the company, as you will see later, can even generate a nice total return.
🇭🇺A thought about dividends for Hungarian investors🇭🇺
💵Diageo (DEO) Acquisitions💵
In this section, I examine how acquisitive the nature of the company is and what impact each acquisition had on the life of the company, if any.
Diageo (DEO) is a serial acquirer of the alcohol industry. There is a very simple reason for this: the alcohol market can grow organically by 1-2% per year, but the company's pricing power actually adds 3-5% to that. In other words, to grow faster, they have to make acquisitions, which risks destroying shareholder value if they overpay.
In the list below you can see the major acquisitions of the past few years, Casamigos was run by George Clooney, while Aviaton was run by Ryan Reynolds, meaning these celebrity-branded beverage categories were actually already known before.
🍸 Diageo (DEO) acquisitions
| Acquisition | Date | Brand / Type | Price (USD) |
|---|---|---|---|
| Casamigos Tequila | 2017 | Tequila | 700 + 300 = 1 billion |
| Aviation Gin + Davos Brands | 2020 | Gin, tequila, mezcal, sake | 610 million |
| Mey İçki (Turkish Raki) | 2011 | Raki & liqueur | 2.1 billion |
| Ypióca (Brazilian cachaça) | 2012 | Cachaça | 300 million |
| United Spirits Ltd (India) | 2011–13 | Indian beverage manufacturer share | 2.1 billion |
| Balcones Distilling (USA) | 2022 | Whiskey | 100 million |
| Don Papa Rum | 2023 | Rooms | ≈ 281 million |
| NAO Spirits (Greater Than, Hapusa) | 2025 | Indian craft gin | 15.2 million |
In the table below you can see the estimated P/S values, i.e. how much revenue each brand could have generated. Based on the estimated revenues, Aviaton was a hell of an expensive acquisition, while the others were acquired by Diageo (DEO) at a relatively fair price. However, according to some sources, Casamigos, for example, sold only 120000 bottles in the year before the acquisition, generating 40-50 million USD in revenue and costing 1 billion USD, meaning that Diageo (DEO) paid twenty times the price for it compared to their revenue at the time, despite the fact that they already bought Don Julio in 2015. The question arises, why was another brand needed?
☝🏻Also adding to the list of mistakes is that Jose Cuervo, the world's leading tequila brand, was not acquired for $3 billion at the time, even though it could have been. Overall, this doesn't show that Diageo (DEO) is a brilliant capital allocator, but I wouldn't call it a bad one either.
📋 Valuation of Diageo's (DEO) acquisitions
| Brand / Acquisition | Price (USD) | Revenue (estimated) | P/S (price/earnings) |
|---|---|---|---|
| Casamigos Tequila | 1 billion | ~200 million | 20-5x |
| Aviation & Davos Brands | 610 million | ~18 million | ~34× |
| Mey İçki (Turkish Raki) | 2.1 billion | ~600 million | ~3.5× |
| Ypióca (cachaça) | 300 million | ~125 million | ~2.4× |
| United Spirits Limited (India) | 2.1 billion | ~2.5 billion | ~0.8× |
How necessary are such acquisitions? The fact is, quite a lot, because if you look at the same activities of the two largest competitors, then there are quite a few acquisitions there. But, since Diageo (DEO) has a market capitalization, revenue and profit that are significantly larger than Brown Forman (BF-B) and Pernod Ricard (RI), therefore, compared to the size of DEO, these cannot be called transformative acquisitions.
📊 Acquisitions of Diageo (DEO) competitors
| Company | Brand/Acquired Entity | Date | Price (USD/EUR) |
|---|---|---|---|
| Brown Forman | Diplomatic rum | 2022 | 725 million USD |
| Brown Forman | Gin Mare | 2022 | 520 million USD |
| Brown Forman | Casa Herradura tequila | 2007 | 776 million USD |
| Brown Forman | Chambord liqueur | 2006 | 255 million USD |
| Pernod Ricard | Allied Domecq | 2005 | EUR 10.7 billion |
| Pernod Ricard | Wine & Spirits (Absolut) | 2008 | EUR 5.63 billion |
| Pernod Ricard | Castle Brands | 2019 | 223 million USD |
| Pernod Ricard | Código 1530 tequila (capital weight) | 2022 | not public |
| Pernod Ricard | Blenders Pride (Seagram India) | 2001–2002 | part of the Seagram India acquisition |
Diageo (DEO) has been selling off unnecessary brands that don't fit into its portfolio, as shown in the table below. This is partly a portfolio cleanup, as it buys premium and super-premium brands and gets rid of lower-margin brands, and partly a debt reduction move with the brands sold.
🍹Brands sold by Diageo (DEO)
| Ev | Brand/transaction | Buyer | Total Amount |
|---|---|---|---|
| 2018 | Seagram's VO, Myers's rum, Popov vodka + 16 others | sazerac | USD 550 million |
| 2022 | Archers gin | De Kuyper Royal Distillers | not public |
| July 2023 | Safari liqueur, Pampero rum | - | not public |
| Oct 2023 | Windsor Scotch | PT W Co (South Korea) | not public |
| Jan 2025 | Guinness Ghana Breweries | Castel Group | 81 million USD |
| Jan 2025 | Cacique rum | La Martiniquaise–Bardinet | not public |
In addition, Diageo (DEO) is funding an initiative called Destill Ventures, which is essentially a startup accelerator for alcohol companies, and because Diageo (DEO) is taking a stake in the companies, it doesn't actually have to buy them out as competitors. Diageo was the sole investor, with a total of about $300 million in funding for more than 35 brands. In March 2025, Diageo announced that it would no longer be accepting new brands into the Distill Ventures program, while existing brands would continue to be managed, but with a smaller team.
🤵Diageo (DEO) management🤵
In this section, I examine who runs the company and how. What is the bonus system, how much risk – skin in the game – do the managers take on while running the company? Is there a family connection, or perhaps a special “heritage” factor?
Diageo (DEO) is a fairly traditional company, with a touch of the luxury industry. It operates as a kind of conglomerate, but its more than 200 brands have their own independent management. Interestingly, the management is quite multilingual, which is logical, since they distribute countless alcoholic beverages in a lot of areas, and it's not a problem if there is a Spanish- and English-speaking manager on the team.
Diageo (DEO) management consists of:
- Ivan Menezes – former CEO – He passed away in June 2023, he was the head of the company from 2012 onwards, he was with the company for 25 years, during which time he increased revenue by 43.5% and the share price increased by 100%.
- Debra Crew – the new CEO – the first female CEO, has held the position since June 2023, her previous positions at DEO: COO, President, Head of the North American Division. She has also worked at other companies: Nestlé, Kraft Foods, PepsiCo, etc. She owns DEO shares worth 1.1 million USD, while her salary is 3.88 million USD.
- Nik Jhangiani – Chief Financial Officer (CFO) – He assumed office in September 2024. He was previously the CFO of Coca-Cola Europacific Partners. He is responsible for financial strategy, cost control and the implementation of the “Accelerate” program, which aims to increase free cash flow and reduce net debt to 2.5–3× EBITDA. He owns DEO shares worth USD 1.9 million.
- Sir Javier Ferran – President – He has been Chairman of Diageo’s Board since 2017, with a three-year term expiring in February 2025. He was previously CEO of Bacardi and Chairman of British Airways parent company IAG. His role is to provide strategic leadership to the board and assist with crisis management, with a particular focus on the US and Latin American markets.
- John O'Keeffe – Director of APAC territories – holds DEO shares worth USD 3.4 million.
Management doesn't really own a lot of Diageo (DEO) shares, with a total management stake of less than 1%. This doesn't necessarily mean that this management is bad, but they could be more attached to the company. Management has been with the company for an average of 3.5 years, so there are relatively many newly appointed executives in positions. I don't really like this kind of management, but it's fortunate that their compensation scheme is strongly tied to the success of the company.
| Position | Basic salary | Full remuneration |
|---|---|---|
| CEO – Debra Crew | ~1.76 million USD | ~3.88 million USD |
| CFO – Nik Jhangiani | ~1.13 million USD | 1.5–2 million USD (base + pension + bonus) |
Regarding management compensation, I found the CEO and CFO figures (Diageo Remuneration Report), and I have to say, they earn very little compared to the size of the company. Actually, this is no wonder, since the criteria for bonuses were barely met. Long-term incentives are set for 3-year periods, and there are also annual targets. You can see how poorly the management was able to meet these at the end of 2024 in the document above, but they essentially managed to meet all important thresholds. I will include a picture that shows the payment of incentives, the members of the management did not earn much:
In relation to the above, it can still be said that the management also does not receive its remuneration while the company is weak, they literally feel the deteriorating numbers in their pockets. Obviously, because of the above, I am interested in how the management explains the weakness of Diageo (DEO):
Debra Crew, CEO, Q2025 XNUMX:
- "Overall, our portfolio is more premium than the spirits industry with over 60% of fiscal twenty four net sales in premium and above versus the industry average of 35%. And this reflects our premiumization strategy and our focus on people drinking better, not more. And this is important as premium brands are growing faster with super premium plus price tiers growing at nearly 1.5 x the rate of total spirits, and we expect this trend to continue positioning us well for future growth."
- "Moving to the broader industry environment, there is currently ongoing debate on whether near term industry pressure is cyclical structural. This is not a new debate. Two of my predecessors, both Paul and Ivan, faced similar questions in prior cycles in 02/2004 and 02/2014. While some of the themes such as GLP ones and cannabis are new, we are not seeing material impact from them. What we are seeing is the current pressure on the industry is cyclical and not structural, and that spirits remain an attractive sector with a long runway for growth where we expect to continue to gain TBA share.”
Debra Crew, CEO, 2025 H1:
- "Our focused strategy is delivering results. Notably, we have held or gained market share in 65% of our net sales and measured markets. We also continue to effectively leverage the strength of our diversified portfolio across price tiers and geographies to respond to emerging consumer trends. Looking ahead, we see opportunities to continue to outperform. We are focused on strategic initiatives that will enhance our financial resilience, driving sustainable long term growth and the ability to deliver positive operating leverage in the future.”
- "I'll come back to this. Europe delivered resilient performance in a continued challenging environment with Guinness again the key driver of growth in the region. In Asia Pacific, performance was negatively impacted by a weaker macroeconomic environment in Greater China, challenging trading conditions in Southeast Asia, and the region was also impacted by the lapping of Shui Jingfang supply replenishment in the prior year. Latin America and Caribbean, our LAC region, is back in growth, partly attributed to deliberate actions that we took across the region. Destocking is now complete, and we are also seeing a consumer environment that is modestly improving, notably in Brazil, and we are also seeing some stabilization in Mexico."
- "We have delivered share gains in almost all of our largest markets, including the U. S, most of Europe and Greater China."
- "While these results are encouraging, I continue to see opportunities for us to do more."
🆚Competitors: Diageo (DEO) opponents🆚
In this section, I examine who the competitors of the analyzed company are, what is their market position, whether they are in a subordinate, secondary or superior role. What is their market share and what is their specialty? Are they losing or gaining market share to their competitors?
For the alcohol market competitors, we need to separate the players in the alcohol market a little, because the largest companies in terms of volume are not spirits producers, but beer producers. However, these are not direct competitors to Diageo, as they do not compete in a subsegment, except perhaps for the Guinness brand. The trend is to “drink less, but better quality alcohol”, so if anyone can steal market share from the other, it is the premium producers. You can see the list of the Top 10 largest alcohol companies below:
| Rank | Company | Revenue (TTM, USD) | Gross margin | Net margin |
|---|---|---|---|---|
| 1 | AB InBev | 58.8 billion | ~55.6% | 11.7% |
| 2 | Kweichow Moutai | ~30–35 billion* | 91.8% | 50.7% |
| 3 | Wuliangye Yibin | ~20–25 billion* | 76.8% | 35.8% |
| 4 | Diageo | 20.3 billion | 60.6% | 17.8% |
| 5 | Heineken | ~23–25 billion* | 36.4% | 1.7% |
| 6 | Constellation Brands | ~8–10 billion* | 51.7% | -4.4% |
| 7 | Pernod Ricard | EUR 12.1 billion (~USD 13.2 billion) | 59.6% | 9.8% |
| 8 | Brown-Forman | 5.37 billion USD | 58.9% | 21.9% |
| 9 | Ambev | ~USD 14–15 billion* | 51.5% | 15.7% |
| 10 | Molson coors | ~USD 10–12 billion* | 39% | 9.1% |
I adjusted the margins in the table above to the latest available data for 2025. Let's take the two Chinese companies out of the picture, I'm not even sure about the accuracy of the data here. AB InBev owns roughly 25% of the beer market, while Diageo (DEO) owns 19% of the spirits market, meaning they are the leaders in these two categories. Diageo (DEO) generally has 3 direct competitors in the premium spirits segment, not counting LVMH, with whom they also share ownership:
- Brown-Forman (BF-B): also a premium spirits range, but much smaller in size, similar metrics (a company with a wide moat), its best-known brand is Jack Daniels
- Pernod Ricard (RI): I think it is the 3rd place in the category, with slightly worse metrics (a company with wide moats), its well-known brands include Chivas Regal, Malibu (the world's leading coconut rum brand) and Kahlua, Martell (the 2nd largest super-premium cognac brand after Henessy), Absolut (the 2nd largest after Smirnoff), Jameson (the largest Irish whiskey)
- Rémy-Cointreau (RCO): a much smaller company, with weaker metrics (it has narrow moats), they are mainly strong in cognacs like Louis XIII and Martin XO, but they also have other well-known brands like Metaxa.
Morningstar sees it this way, but their analysis doesn't include all four names at once. A common feature of all four spirits companies, but also true of beer producers, is that their valuations are very low, so the weakness is not just specific to Diageo (DEO), but rather an industry-wide phenomenon.
One thing is important, however: Diageo (DEO) has the strongest alcohol portfolio of the 4 companies, and if we add up the market capitalization of the 3 smaller competitors, Diageo is still about 40% larger than them. And in this industry, size matters a lot, because it is very important whether you have enough distilleries, cellars, where you need to store millions of barrels for 18 years, and whether you have a share of premium cognacs and champagnes with LVMH. Based on this, only Brown-Forman (BF-B) can be compared to Diageo (DEO), but the characteristics of almost all companies are roughly similar:
- almost the same debt ratio
- similar margins
- low company valuation
- similar internal rate of return for Brown Forman (BF.B)
I've included the internal rate of return metrics for Pernod Ricard (RI) and Rémy-Cointreau (RCO) here to show how much of a difference there is compared to the values for Diageo (DEO) and Brown Forman (BF-B), which I've included in the analysis earlier. It's telling how much the numbers have collapsed since 2023, a true measure of quality where (RI) and (RCO) fall short against Diageo (DEO).
Since these parameters are very close to each other, but Diageo (DEO) is much larger, I find it hard to imagine smaller companies stealing Diageo's (DEO) market share in a segment where the brand heritage is also particularly strong. Of course, this is also true in reverse: if someone likes Tennessee whiskey, they will drink Brown-Forman's product, Jack Daniels, and if they want scotch, they will choose something from Diageo's range. If we look at capital strength, Diageo (DEO) is the best in this too, and since the market is very fragmented, if you have to compete with competitors for a good acquisition target, they will probably have the most money to reacquire the next premium brand.
💡You should also check out our other stock analyses, which you can find here: iO Charts Stock analyses
⚡What risks does Diageo (DEO) run?⚡
In this section, I examine all the risks that could affect the company's long-term future. Currency, regulatory, market disruption, and so on.
Although I initially thought that such a mature company ran relatively few risks and that its business was predictable, I nevertheless managed to list quite a few factors that contradict this.
📉 1. Macroeconomic cycles
- Decrease in willingness to consume during a recession.
- Inflationary pressure → increase in raw material prices (grain, glass, energy).
- Change in interest rate environment → increase in financing costs.
I would like to highlight two things regarding the changes in macroeconomic cycles. Fortunately, Diageo (DEO) is able to largely pass on the costs of rising raw material prices to consumers. What it has no influence on, however, is the decline in consumption during a recession. Beer-type beverages are typically more resilient to crises, with consumption volumes falling less than those of spirits, and this is especially true for products positioned in the premium or higher segments. Due to the high price, consumers postpone consumption during a crisis. However, during an upturn, the consumption surplus returns faster and more strongly. In other words, Diageo (DEO) is a cyclical company, which is currently suffering the consequences of consumers' restrained consumption. This weakness is currently particularly visible in the Latin American and Caribbean region.
💱 2. Currency risk (FX risk)
- Most of the revenue comes in GBP and local currencies, while reporting is done in USD or GBP.
- USD–GBP, USD–NGN (Nigerian Naira), EUR–GBP volatility.
- Hedging strategies can be costly and do not provide complete protection.
Diageo (DEO) is present in 180 countries with 200 brands, and although it collects about 40% of its revenues in the US and 25% in Europe, the company has to work with quite a few different currencies. The dividend payment is the most visible example of how its value is scattered due to exchange rate fluctuations. Typically, the problem is that costs are often incurred in GBP, while a significant part of the revenue is in USD. This often results in a headwind on the revenue side.
🧬 3. Lifestyle change and health awareness
- Spread of alcohol-free lifestyle
- The rise of healthier alternatives (kombucha, mocktails, low-calorie drinks)
- Tightening sugar and alcohol taxes
It is most typical of Generation Z that they consume 20% less alcohol than Generation Y (Gen Z Alcohol Consumption Decline). However, the proportion of alcohol consumers is not smaller, but larger, they only consume less in volume, but more premium and ready-to-drink beverages. The health-conscious trend is also very strong, many people do not drink alcohol at all. However, I am not convinced that this will not result in a decline in the revenues of commercial producers, while strengthening the consumption of premium brands.
⚖️ Substitution effect
It is also worth mentioning the substitution effect, which was mentioned not by Diageo (DEO), but by Brown-Forman (BF-B) in one of its quarterly reports, and this applies to cannabis consumption:
- It is common for medical cannabis users to consume less alcohol, with a reported reduction in alcohol consumption of approximately 40–60%.
- A New Zealand survey found that 60% of people consumed less alcohol after using cannabis.
- In California, a 15% reduction in alcohol consumption was measured after cannabis legalization, and medical cannabis has also been shown to replace alcohol in other US states.
💊 4. GLP-1-based weight loss drugs
- Research suggests they may reduce cravings for alcohol.
- If they become widespread, they could cause a permanent decline in demand.
- Investors like Terry Smith are already taking this impact into account.
GLP-1 is a peptide produced by the gut, which is mimicked by GLP-1-based weight loss drugs. These reduce the desire to drink alcohol by about 40%, which means they hurt sales for alcohol companies. Currently, about 40 million people have access to them, but the market is roughly 2 billion! people, so we are at about 2%, and consumption is growing rapidly. The question is, how many people are there who are overweight, want to lose weight with the help of medication, and are also premium alcohol consumers?
I think the risk of this is very difficult to estimate at the moment, but since drugs like Wegovy are quite expensive, they will initially be used by the wealthier classes, who also consume premium and above-premium alcoholic beverages. So there is definitely an overlap between the two, and although I estimated with ChatGPT what percentage it could affect, according to them it is currently 5 million premium alcohol consumers, the numbers are very uncertain. I think this is a typical disruptive situation for the alcohol market and the outcome is completely unpredictable. The rise of GLP-1 drugs is still relatively long, but this impact must be taken into account.
⚖️ 5. Regulatory and tax risk
- Restrictions on alcohol consumption (e.g. marketing or advertising ban, labeling)
- Increase in excise taxes
- Action against industrial concentration
There have been several proposals to impose special taxes on alcohol, as they did on energy drinks and chips, and to introduce advertising restrictions similar to those in the tobacco industry. Another real risk is the deterrent effect of stickers warning about the dangers of alcohol consumption, although this has not really worked for cigarettes either. Since the alcohol industry is quite prone to acquisitions, the authorities could put up obstacles in their way, although I think this is unlikely in such a fragmented market.
Tax risks include the extra taxes of the tariff war that the Americans want to impose on all imported goods, which of course also affect alcohol companies. According to Diageo (DEO), such measures could cut $150 million in profits.
🚫 6. Counterfeiting and the grey economy
- Especially in emerging markets (e.g. Africa, Asia)
- Reputational damage + undermining price competition
- Difficulty of enforcement
It's completely real, for example, the Russians shut down entire distilleries that were counterfeiting Johnny Walker. This form is quite common in corrupt countries and is causing a lot of damage to Diageo's (DEO) reputation.
🏭 7. Supply chain and disruptions
- Glass, cork, missing label
- Strikes, logistical difficulties, container shortages
- European trade challenges after Brexit
In 2022, there was a shortage of products due to the disruption of supply chains, while there is currently an oversupply, as consumption has fallen, so some breweries and distilleries have either shut down or reduced their capacity. However, in the case of premium spirits producers, the accumulation of inventory can be postponed by extending the maturation and storing the drinks, which means a loss of income in the present, but in the long term they produce larger quantities of higher-quality alcohol, on which the margin is also higher.
🌡️ 8. Climate risk and raw material exposure
- Agave (Don Julio, Casamigos tequila): It is grown in Mexico and is highly sensitive to drought, heat, and pests.
- Barley (beer, whiskey): prefers cooler climates, yield may decrease at higher temperatures and with water shortages.
- Water: Distilling and beer production are water-intensive, so water restrictions or increases in water rates are a direct cost risk.
- Sugar cane (rum): with fluctuating yields and strike risk due to climate stress and labor issues.
Given how strongly the impact of climate change is felt in the weather, this risk will certainly arise, if not in the short term, then in the medium and long term. Just as shrinking growing areas are being complained about in the case of coffee, the same may be true for various other plants that serve as raw materials for alcoholic beverages. Examples include Agave, which is used to make tequila, or sugar cane, which is used to make rum.
From the above, I see the biggest threat in the decreasing consumption of Generation Z and the effect of GLP-1 drugs on reducing alcohol consumption, because these are quite sector-specific problems.The rest is true for pretty much every other industry, like customs, counterfeiting, supply chains, and the like, but fortunately, quality management can solve this.
I made a self-check list that confirms the thesis about the company:
- low or zero debt: YES/PARTLY/NO
- significant economic benefit that can be protected in the long term: YES/PART/NOT
- excellent management: YES/PART/NOT
- excellent indicators, significant owner value creation: YES/PARTLY/NO
- The majority of the total return comes from reinvesting the cash generated, not from dividends: YES/PARTLY/NO*
- appropriate share valuation: YES/PARTLY/NO
* The total return currently does not come from dividends, although this is also significant, because the valuation is low.
There are a few things I don't like about Diageo, one is the high debt, the low coverage is quite worrying, especially if revenue continues to decline. The other is the relatively new management, the quality of which I find difficult to judge.
We also need to watch out for headwinds, such as the rise of GLP-1 drugs and declining consumption trends. However, we have already seen a similar scenario in another industry, namely the tobacco industry. The good news is that Philip Morris (PM) is beating its market rivals in terms of innovation and price appreciation, and if anyone has a chance to do so in the alcohol segment, I think it's Diageo (DEO).
👛Diageo (DEO) Valuation👛
In this section, I will examine the company's current valuation compared to historical values and consensus fair values.
Rating metrics
In the two rows below you can see valuation metrics. The first row shows the current valuation, the second row shows the historical valuation. Although I don't consider these metrics to be particularly good (there are few things you can conclude from them), they can be used as a basis for comparison.
Diageo (DEO) valuation
- Share price (2025-07-04) 104.73 USD; P/E: 15.03; EV/EBITDA: 11.01; P/FCF: 19.83 (Based on Fiscal.ai)
- Historical median valuation (10-year average): P/E: 23.95; EV/EBITDA: 16.8; P/FCF: 28.24 (Based on Gurufocus)
Since I looked at the entire industry and noticed that competitors are also trading at depressed valuations, revenue and sales figures are falling for almost all of Diageo's (DEO) competitors, so this is not a company-specific problem. That's why I also included the valuations of Brown-Forman (BF-B), Pernod Ricard (RI) and Rémy-Cointreau (RCO). To see each in dollars, I used the OTC market identifiers:
Brown-Forman (BF-B) rating
- Share price (2025-07-04) 28.27 USD; P/E: 15.36; EV/EBITDA: 12.22; P/FCF: 31.03 (Based on Fiscal.ai)
- Historical median valuation (10-year average): P/E: 34.01; EV/EBITDA: 24.28; P/FCF: 44.78 (Based on Gurufocus)
Pernod Ricard (OTPCK:PRNDY) valuation
- Share price (2025-07-04) 21.17 USD; P/E: 23.26; EV/EBITDA: 14.19; P/FCF: 20.92 (Based on Fiscal.ai)
- Historical median valuation (10-year average): P/E: 25.44; EV/EBITDA: 17.56; P/FCF: 30.19 (Based on Gurufocus)
Rémy-Cointreau (OTCPK:REMY) valuation
- Share price (2025-07-04) 5.56 USD; P/E: 21.56; EV/EBITDA: 13.43; P/FCF: 35.07 (Based on Fiscal.ai)
- Historical median valuation (10-year average): P/E: 36.83; EV/EBITDA: 23.74; P/FCF: 61.43 (Based on Gurufocus)
Why don't you see a DCF model in this segment? Because each input data produces a huge variance in the output, and most of the data is an estimated value. Therefore, the valuation will never actually be a single exact number, but rather a range can be defined where the current valuation falls.
You should apply a margin of safety to this price range, according to your risk appetite.
So don't expect an exact price, no one can say this for a stock. However, there are fair value prediction services, almost every major stock screening site has one, I've aggregated them below. However, if you want a good stock support service, subscribe to The Falcon Method (The Falcon Method), entry prices are given for the stocks analyzed there.
Diageo's valuation
- Wall street estimates: 226 USD (I took into account the average of the two extreme values of Alphaspread:)
- Peter Lynch Median P/E: $151.69
- Morningstar: $142 (5 stars)
- Gurufocus: $190.18
- AlphaSpread: $161 (35% undervaluation compared to the base case)
- SimplyWallst: 196.57 USD
Average (based on 6 reviews): $178 (42% underrated)
How to interpret the numbers? The "margin of safety" rule below should be applied according to your convictions, so if you really believe in the company, you can buy it at fair value, but if you proceed in 10% increments, the math would look like this:
- 10% margin of safety: 178*0.9=160.2 USD
- 20% margin of safety: 178*0.8=142.2 USD
- 30% margin of safety: 178*0.7=124.6 USD
- 40% margin of safety: 178*0.6=106.8 USD
- 50% margin of safety: 178*0.5=89 USD
Of course, the list could be continued indefinitely, but the point is that the right purchase price for you is determined by the level of your conviction. I think there is no question that in the case of Diageo (DEO), the risks have been amply priced in by the market, and the stock is currently very cheap.
I've also included a picture of Interactive Brokers' EVA data, which shows how much red, or value creation, is generated for the cost of capital shown in blue. The grey bars show the future value added, or FVA, which is the future expectations the market is pricing in for the stock. To put it simply, it's mostly nothing, which means the stock is undervalued. I've also included a chart from Games Workshop so you can see an overvalued stock next to Diageo (DEO) so you can compare the differences. However, the charts shouldn't be taken at face value, Interactive Brokers can't provide completely up-to-date EVA data.
🌗Significant news and the last quarter🌗
In this section, I will examine what happened in the last quarter, whether there were any significant news/events. If the company reports semi-annually, we examined this period.
The most recent was the third quarter of 2025, as Diego (DEO) is also listed on the US stock exchanges, so they do not only prepare semi-annual reports, as English companies usually do. Overall, the third quarter was better than expected, the following can be said about it:
📅 Diageo (DEO) Latest Quarter (2025 Q3) – May 2025
- net income: 4.4 billion USD (+2.9% higher than in 2024)
- organic net income: +5.9% (2.8% volume and 3.1% price increase)
- North America organic net revenue: +6.2%, strong Don Julio sales
- Latin America and the Caribbean organic net revenue: + 28.5 %
- APAC organic net revenue: 1.6%, good performance from Guinness
- Expected US tariff: +10%, which also affects the Johnny Walker, Guinness, Baileys brands, this will cost the company approximately 150 million USD, half of which they are trying to offset through restructuring and cost reductions
- Canadian and Mexican imports, which account for 50% of US net sales, will likely remain duty-free.
- expected operating profit: -1.2%
- At the end of the year, the expected debt will be between 3.3-3.5 on a net debt/EBITDA basis, but the longer-term target is between 2.5-3 within three years
- An accelerator program has been launched, which includes savings and cash returns to investors worth $3 billion next year.
- $500 million in cost savings over three years
"We continue to believe that the near term pressure is largely macroeconomic driven, with continued uncertainty for consumers impacting both time and pace of recovery. With that, I'd like to hand back to the operator to open the line for questions for Nick and myself." – 2025 Q3, Deborah Crew
Overall, the results were better than expected, but nothing serious was announced regarding the Q report, this accelerator program thing is also a bit vague, the management is secretive, they promise more information about their activities in August.
Next quarterly report: 2026.08.05
✨Other interesting facts about Diageo (DEO)✨
Everything that was left out of the previous ones, or if there is any special KPI - key performance indicator - or concept that needs to be explained, is included here.
Guinness Thor house: The adult Disney Land, you can taste all kinds of alcohol in Dublin.
Seedlip: the world's first non-alcoholic distillery, which was acquired by Diageo (DEO) in 2015.
Scotch whisky: can only be produced in Scotland, is territorially protected. Whiskeys are matured in 200-500 liter oak barrels for a minimum of 3 years. Scotch is Scotch whiskey because its alcohol content is at least 40%. Diageo (DEO) owns 30 distilleries, while there are a total of 143 in the world, and 70% of the Scotch barrel capacity.
Tequila: tequila is a Mexican spirit made from the agave plant, more specifically from 100% blue agave sap, or if it is "mixto", at least 51% agave, and the rest can be other sugars (e.g. cane sugar). tequila is a geographically protected drink, similar to Champagne or Cognac. Its regulation is overseen by the Mexican government and the CRT (Consejo Regulador del Tequila).
BRK.B interest: Berkshire Hathaway also owns 227750 shares in Diageo (DEO), worth $24 million, which it acquired indirectly through the General Re Corp acquisition in 2007 and has held since. This position is actually completely insignificant compared to the size of BRK.
🔑Key Performance Indicators (KPIs)🔑
- Regional distribution of sales: Since Diageo (DEO) has significant exposure to the US (39%) and Europe (24%), I would definitely pay attention to these. The LAC region, which is also an important market for the company, has been weak in the last 2-3 quarters.
- Volume and margin of some brands: Diageo (DEO) is particularly strong in tequila, scotch, gin and vodka, as well as in premium Guinness beer. It is worth following sales volumes and price increases, especially in the shadow of tariffs, as the company will try to pass this on to consumers. Unfortunately, in many cases, data providers only provide data by product category, e.g. spirits, beers, RTD drinks, so you have to search for specific brands online.
- Proportion of premium and non-premium products in revenue: Diago (DEO) generates 62% of its revenue from premium and above-premium spirits. In the long term, Diego has an interest in seeing the premium market grow at the expense of non-premiums. This is obviously a longer-term trend, you don't have to watch it very closely, but sometimes it's worth looking at the numbers.
Diageo (DEO) Summary
Summary of the analysis, drawing lessons.
Diageo (DEO) is a good company, a market leader, with very strong economic fundamentals, but low growth. It is a fixed star, with countless advantages, especially in terms of its dominance within certain beverage categories, such as the scotch whiskey, vodka or tequila market. The company has to work in a strong headwind, as the number of alcohol consumers is constantly decreasing, but fortunately it is also becoming premium. This is also a sin stock, a bit like the tobacco industry, but they are in a significantly better position, but there may be risks on the regulatory side. My biggest fear, however, is the spread of GLP-1 drugs, which reduce the desire to drink alcohol, which could have a disruptive effect on this industry.
There are two things I don't like, one is the high debt, which the company manages quite well. The natural operation of the alcohol market involves continuous acquisitions of competitors, and that requires capital. I see a bigger problem as the management does not own a significant share package, but their remuneration is in line with the company's interests. Diageo (DEO) has a very depressed valuation, but this is understandable, as there are risks that are difficult to price, but people have been drinking alcohol for thousands of years, and it is difficult to imagine that it would be any different in the future. Of course, you can cover the alcohol sector not only with Diageo (DEO), but also with Brown-Forman, which is also undervalued and analyzed by us (Brown-Forman stock analysis).
Frequently Asked Questions (FAQ)
Which broker should I choose to buy shares?
There are several aspects to consider when choosing a broker - we will write a complete article about this - but I would like to highlight a few that are worth considering:
- size, reliability: The bigger a broker, the safer it is. Those with a banking background – Erste, K&H, Charles Schwab, etc. – are even better, and well-known brokers are typically more reliable.
- expenditures: Brokers operate with various costs, such as the account management fee, the portfolio fee - which is the worst cost -, the purchase/sale fee and the currency exchange cost (if USD is not deposited in the brokerage account)
- Availability of instruments: It doesn't matter which broker has which market available, or whether they add the given instrument upon request and how quickly.
- account type: cash or margin account, the latter can only be used for options. For Hungarian tax residents, having a TBSZ account is important, but citizens of other countries also have special options – such as the American 401K retirement savings account – which are either supported by the broker or not.
- surface: is one of the most underrated aspects, and it can be a real pain. Anyone who had an account with Random Capital, a now-defunct Hungarian broker, knows what it's like to work on a platform left over from the 90s. Erste's system is lousy slow, Interactive Brokers requires a flight test, and LightYear believes in simple but modern solutions.
Based on the above, I recommend the Interactive Brokers account because:
- the world's largest broker with a strong background
- a few million instruments are available on it, and shares listed on multiple markets – e.g. both the original and the ADR – of a single share are often available
- Interactive Brokers a discount broker, they have the lowest prices on the market
- you can link your Wise account to them, from which you can quickly transfer money
- Morningstar's analyses are available for free under the fundamental explorer (good for analysis)
- EVA framework data is available under fundamental explorer (useful for analysis)
- they have both cash and margin accounts, Hungarian citizens can open a TBSZ
- you can use three types of interfaces: there is a web and PC client and a phone application
What data sources did you use to analyze stocks?
For quantitative analysis, we primarily use various stock screening sites, and for qualitative analysis, we use company reports and other analyses, such as the Substack channel, podcasts - Business Breakdowns - and similar sources.
What matters: value or quality?
The answer is both, but quality is more important. It is much better to buy a very high-quality company at a fair price than to buy shares of a cheap but poor-quality company.
What is the best time frame to buy shares?
The minimum is 5 years, but you should consider the time horizon from 10 years to infinity. Our approach is typical "buy and hold", the emphasis is on selection, then we try to hold the shares for as long as possible, which requires conviction. We rarely sell, mainly if we feel that the thesis we set up has been broken or if we have made a mistake.
Which is better: individual stocks or ETFs?
There is no truth to this question. It is very easy to track the market with an S&P 500 ETF, and it is worth doing for beginners, because it can be done with a little knowledge and practice. Analyzing individual stocks requires 30-50 hours per company, so we do not recommend it to those who do not like it.
Do you hold the shares in a TBSZ account?
Why don't you specify a specific purchase price for the shares in your analyses?
We do not set purchase prices for several reasons: firstly, because it is impossible to calculate the exact value of a company. Secondly, because we cannot give investment advice, these analyses are only made to support the decisions of others. That is why we use fair value estimates from other services, as well as a certain margin of safety. Ultimately, your conviction will decide how much a company is worth to you.
Which stock price will rise or fall?
Nobody knows, because there is no magic bullet that can tell. It can be based on mathematical probabilities. The prices of high-quality companies that have growing sales, are able to reinvest the cash generated into the business, and have high intrinsic value creation tend to rise in the long term. But in the short term – a few years – the market and the price can move anywhere.
Legal and liability statement (aka. disclaimer): My articles contain personal opinions, I write them solely for my own entertainment and that of my readers. The articles published here do NOT in any way exhaust the scope of investment advice. I have never intended, do not intend, and am unlikely to provide such in the future. What is written here is for informational purposes only and should NOT be construed as an offer. The expression of opinion is NOT in any way considered a guarantee to sell or buy financial instruments. You are SOLELY responsible for the decisions you make, and no one else, including me, assumes the risk.
