Buy Diageo for its brands & global reach

Article Excerpt

DIAGEO PLC ADRs $63 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 624.9 million; Market cap: $39.4 billion; Price-to-sales ratio: 2.6; WSSF Rating: Above Average) is the world’s largest premium alcoholic-beverage company. (Each American Depositary Receipt represents four Diageo common shares.) London-based Diageo has 28% of the global market. Spirits account for 73% of its sales, followed by beer (22%) and wine (5%). It gets 35% of its sales from North America, 30% from Europe, 10% from Asia, and 25% from the rest of the world. Diageo was formed in 1997 through the merger of GrandMet and Guinness. High-quality brands cut Diageo’s risk Diageo owns some of the top brands in the alcoholic-beverage business, including Guinness stout, Smirnoff vodka, Johnnie Walker scotch whiskies, Captain Morgan rum, Baileys Original Irish Cream liqueur, J&B scotch whisky and Tanqueray gin. Beer brands include Harp lager, Smithwick’s ale, Red Stripe lager and Tusker lager. The company’s wine brands include Beaulieu Vineyard, Sterling Vineyards, Barton…