Year-to-date, Diageo’s stock is down ~20% down, and has also declined 20% over the past five years. Today, the company trades at ~15x NTM earnings, with ~1-2% organic sales growth. Diageo owns a portfolio of ~50 core brands that consumers have been drinking for decades; Johnnie Walker since 1820, Don Julio since 1942. The majority of its brands have stood the test of time. 

Diageo’s management changes and current valuation piqued our interest to revisit the company. This interview with a former Diageo executive highlights a few interesting points that provide context to Diageo’s challenges beyond the well publicised changes in drinking habits and pressure on unit volumes. 

The first potential challenge is Diageo’s weak RTD performance. 

Diageo is significantly underweight RTDs which is one of the fastest growing areas of spirits. In H1 25, RTDs accounted for ~4% of Diageo’s total sales compared to ~11% of the total spirits market.