Back to top

Analyst Blog

Diageo plc (DEO - Analyst Report), is geared to increase its presence in the whiskey category. In fiscal 2012 it announced plans to invest £1 billion ($1.64 billion) to increase Scotch whisky production. As a part of this strategy, Diageo recently declared that it further intends to strengthen the category by building a 1.8 million proof gallon distillery and six barrel storage warehouses in Shelby County, KY. The finalization of the $115 million construction project, however, is subject to approval by the local government.

The new facility, spread over 330 acres of land, will facilitate the distillation of several current and future Diageo bourbon and North American Whiskey brands. Diageo remains on track to increase its presence in the fast growing North American whiskey sector armed with its leading flagship and new-to-world brands. Moreover, per Nielsen market research company, bourbon is currently the fastest growing spirits category in the U.S.

In addition to the construction of the new distillery, Diageo announced its plans to invest £30 million ($49 million) to expand the Clynelish Scotch Distillery located in Sutherland town of Brora, Highland Council, in the beginning of calendar 2014. Moreover, it has undertaken a £25 million ($41 million) expansion plan in the Glen Ord Distillery, to increase its production capacity. Diageo also plans to increase the capacity at Teaninich Distilleries by two-fold and build a distillery at Alness in the near future.

In the third quarter of fiscal 2014, Diageo’s North American segment’s organic sales climbed 1.2% backed by strong business of the reserve brands. However, growth rate was slower than the previous quarter as organic sales growth was very high in the comparable quarter of the previous year. U.S. spirits delivered another good quarter with strong growth from super and ultra-premium brands and new innovation launches.

London-based Diageo owns brands such as Johnnie Walker, Smirnoff and Guinness and has been exploring opportunities to expand geographically through acquisitions. The Zacks Rank #4 (Sell) company has been witnessing declining total volume and organic sales for the past few quarters due to unfavorable foreign exchange.

Other stocks in the consumer staples sector worth considering are The Hain Celestial Group Inc. (HAIN - Analyst Report), B&G Foods Inc. (BGS - Snapshot Report) and Inventure Foods Inc. (SNAK - Snapshot Report). All the stocks carry a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%