Which brands could Diageo sell as part of ‘substantial’ portfolio shake-up?

Major brands could be up for sale as part of “substantial changes” to Diageo’s portfolio, its CFO Nik Jhangiani indicated last week.

Amid continued sluggish demand for spirits globally, Diageo plans to boost free cashflow and lift margins via a new operating model dubbed ‘Accelerate’.

In the first phase of Accelerate, the London-listed group has outlined a target to “sustainably deliver” around $3bn free cashflow per year from fiscal 2026, supported by a $500m (£370m) cost savings programme.

Changes were likely to go “above and beyond” smaller disposals announced in recent years, Jhangiani said.

So, which brands remain sacred to Diageo, and which could be sacrificed?

Guinness rumours

Almost inevitably, any suggestion Diageo is looking at brand disposals leads to speculation about Guinness.

A beer-y outlier in Diageo’s spirit-laden portfolio, Guinness continues to confound expectations globally. After four consecutive years of double-digit growth, it now accounts for around 10% of all Diageo sales. In the UK, the stout is bucking wider malaise in beer and cider, having added £34.3m on volumes up 11.5% [NIQ 52 w/e 25 January 2025].

Conventional wisdom suggests Guinness is nearing peak value, leading to conjecture Diageo might be about to cash in. A sale could fetch up to $10bn, a Bloomberg report suggested in January. Such a move would simplify Diageo’s business significantly, enabling it to focus entirely on spirits.

“Guinness is the only beer brand Diageo has of any scale, and there aren’t many companies that combine beer and spirits,” says Laurence Whyatt, head of European beverages research at Barclays. “You can see why rumours circulate.

“If you were coming up with a reason to sell, the argument would be that the growth is not sustainable, and therefore you want to sell it at the top valuation. But for what it is worth, we think it is [sustainable].

“They’ve developed a formula around marketing Guinness, and they’re doing that very successfully. I’m convinced they’ve done that in a way that can be replicable in future years. So I’d be surprised if it was on the blocks.”

Diageo is also adamant Guinness is not for sale. And having quashed rumours circulating following the Bloomberg report in January, Jhangiani stressed its potential for continued growth.

The stout remains a “relatively small player” in the US, Jhangiani told attendees at a Guinness investor and analyst event in Dublin last week. If Guinness had just a quarter of the US share it enjoyed in Great Britain, this would represent an incremental $500m in net sales value growth, he pointed out.

Heading off criticism of his earlier comments, Jhangiani later added: “No, I did not go off script when I talked about substantial [disposals]. I can also say, to be clear, [our stake in] Moët Hennessy and Guinness, as we have highlighted, are not for sale.”

Piecemeal disposals

Diageo’s CFO did, however, reiterate the group would be “more rigorous in pursuing disposals” where “appropriate and consistent with our long-term strategy”.

It has been ‘decluttering the tail’ in its portfolio for some years already. Recent offloads have included shareholdings in breweries across Africa, as well as regional oddities such as Safari liqueur and Cacique rum. It sold Archers to De Kuyper Royal Distillers and Picon – a French liqueur – to Campari in 2022, and before that the Sazerac company acquired the Seagram’s whisky brand, along with Myers’s Rum, Popov vodka, Booth’s Gin, Goldschläger, Yukon Jack, Sambuca and 11 other brands in 2018.

But generating the kind of cashflow Jhangiani is after will require a significant step up, Whyatt says. Finally finding a buyer for Pimm’s or flogging off the rest of Cîroc won’t touch the sides.

“It seems that he wants to deleverage pretty quickly,” Whyatt  says. “He’s very focused on cash generation and the leverage ratio, and presumes that gives [them] a bit more optionality. But if you’re going to do that, you need to sell to make a few billion.”

Whyatt declines to speculate explicitly at a brand level, but says Jhangiani’s speech indicates anything not “growth or premium accretive” could be sold or spun out.

Vodka and rum woe

A couple of brands might fit the bill. In the six months ended 31 December 2024, Diageo’s vodka net sales declined by 10% in the all-important North American market, which makes up 40% of total sales. Declines were driven by “increased competition” in RTDs as well as “overall category weakness, including in Cîroc and Smirnoff”, it said.

Smirnoff has been owned by Diageo since its inception in 1997 and is one of the world’s largest spirits brands – shifting 26 million nine-litre cases in 2023 [Statista]. But premiumisation and US spirits trends – with vodka continuing to lose share of throat – aren’t in its favour. An offload could fetch Diageo a handsome price while enabling it to focus on more upmarket vodkas Cîroc and Ketel One, and continue to grow in tequila.

Captain Morgan is another sizeable brand struggling over the Atlantic. Annual sales were around 12 million cases in 2023. Net sales in North America declined 13% in the six months to December “due to rum category weakness”, according to Diageo.

Like Smirnoff, Captain Morgan is at the value end of the price spectrum – a 70cl bottle can frequently be found for less than £20 in UK supermarkets (and even less in the US). Diageo also owns Ron Zacapa and Don Papa, both of which sit at much higher price points.

Offloading Smirnoff or Captain Morgan – or both – would fit with Diageo’s stated aim to improve cashflow whilst focusing investment on fast-growing, premium spirits.

It would also, however, have an outsized impact on sales in the UK. Smirnoff’s off-trade sales, whilst in mid-single-digit decline last year, remained just shy of £600m [NIQ 52 w/e 19 April 2025]. Captain Morgan, too, remained worth almost £200m. Selling either would represent a significant hit to UK volumes, where categories such as tequila and US whiskey remain relatively nascent.

Diageo, unsurprisingly, is unwilling to shed more light. “We can’t comment on market rumour or speculation,” says a spokeswoman.

That’s unlikely to stop industry tongues wagging in the coming months, however.