The global spirits industry may be heading for a round of consolidation, and leading spirits company Diageo can attest to the fact that mergers can drive growth. It has entered new markets and increased margins by selling more brands through its existing sales force after acquiring Seagram, Bushmills, and Ketel One. Diageo is in the market again, possibly pushing to own all of Moet Hennessy, in which it currently has a 34% stake.
The company's 7% sales drop for the first three months of 2008 is among the mildest declines posted by similar beverage companies; and the company reaffirmed that it expects 4% to 6% growth in operating profit for its current fiscal year and double-digit earnings per share growth.
--K.B.
