Diageo, the world's leading spirits manufacturer, is actively exploring the divestment of its beer portfolio due to concerns about profit margins, Axios cited sources familiar with the matter. The strategic move excludes the iconic Guinness brand from the potential sale. The company, based in London/UK, aims to offload beer labels such as Smithwick's, Kilkenny, and Harp Lager based in Ireland, as well as Tusker in Kenya, among others. Axios notes that these beer brands have been a drag on Diageo's overall business profitability.
While the beer sector represents only 14% of Diageo's total sales, amounting to GBP 3.36 billion for the year ended June 30, spirits sales continue to dominate, contributing a significant 81%. A Diageo spokesperson, responding to market speculation, stated, "We do not comment on market speculation.” Other sources close to Diageo noted that there are currently no plans to sell any beer brands.
Despite the potential divestment, Diageo is actively pursuing strategic initiatives in the beer sector, such as the construction of Ireland's first purpose-built carbon-neutral brewery. The brewery, slated for Littleconnell, Newbridge, Co. Kildare, is part of a EUR 200 million investment announced in July 2022. (inside.beer, 15.7.2022)
Although faced with a temporary setback due to an environmental appeal (inside.beer, 14.9.2023), Diageo has this week received approval to proceed with the project. The brewery, set to be operational with a capacity of two million hectolitres, will become the second-largest brewing facility in Ireland, following St James's Gate.