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Diageo (DEO) Recalls Guinness Stout: What You Should Know

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Diageo plc’s (DEO - Free Report) Guinness has been recalling its recently launched Guinness 0.0 drink in Great Britain due to microbiological contamination, per media reports. Guinness 0.0, which was launched nearly two weeks ago, is a non-alcoholic beer from the St. James’s Gate brewers with a smooth taste and balanced flavor in dark color of Guinness.

Per media reports, management had warned consumers that the Guinness 0.0 cans’ contents were unsafe to consume. These cans had taken nearly four years to develop and the contamination might have probably occurred in the production process at its St. James’s Gate brewery. Currently, tests are being executed to find out the cause and further production is at a halt. These reports also suggest that consumers who have bought these cans are instructed not to drink, and instead return the cans, thus being eligible for the entire refund. The company also looks to remove this product from the supermarkets and other shops.

We note that Guinness has a long history of innovation and brewing brilliance since 1759. The Guinness 0.0 at the St. James’s Gate brewers uses the same natural ingredients– water, barley, hops and yeast. They remove the alcohol via a cold-filtration process which filters alcohol without thermal stress to the beer, thus guarding the integrity of taste and character. Then the brewers balance the flavors to give a unique flavor profile and Guinness’ taste attributes. However, other variants and brands of Guinness are unaffected.

A glimpse of Diageo’s share price in the past month reveals that it has gained 10.8% compared with the industry’s 8% rally. The company is relentlessly working to leverage its existing e-commerce capabilities and accelerate investments in the online platform to cater to the lockdowns-driven shift in consumer shopping behavior. The online platforms have become more relevant amid the coronavirus pandemic as consumers were confined to their homes. The company has diverted its efforts to connect with consumers and maintain brand relevance by responding to increased opportunities of at-home consumption occasions. This included new occasions like wanting to enjoy bar-quality drinks at home.

Further, the company has inspired consumers with cocktail recipes, new serves and ways to enjoy its brands with food. With easing of lockdowns across the globe, the company is witnessing a gradual recovery in on-trade volumes from bars and restaurants. As a result, it predicts sequential improvements in organic net sales, volume and operating profit in the first half of fiscal 2021. It also plans to increase marketing investment as demand recovers. Diageo currently displays a Zacks Rank #3 (Hold).

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