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Diageo's (DEO) New Collaboration Center to Support Growth
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Diaego plc (DEO - Free Report) opened a new 17,000sq ft. state-of-the-art collaboration center in Stamford, CT, in a bid to catch up with the latest industry trends, advanced technology and category insights. This move will help its distributors and agency partners better understand the changing landscape of the alcoholic beverages industry, which in turn will improve customer experiences.
The center, which comes within the company’s broader Stamford office, will also support its existing global Experience Center located in London. Management also noted that this latest development will set a transformational wave of change across the beverage alcohol industry.
Further, the opening of the new center is in sync with Diageo’s Society 2030 targets, which aim at creating an inclusive and sustainable world. Visitors to the center can interact with live resident mixologists. Moreover, the center will be accessible to those who cannot visit in person through virtual reality technology.
What Else Should You Know?
Diageo has been gaining from increased demand in the off-trade channel, changes in consumer occasions and investments in new opportunities. Further, fast recovery in North America, which is its largest market, has been a key driver. This was backed by strong consumer demand, robust market share growth in the spirits category, positive category mix and uninterrupted stock replenishments by distributors and retailers. Also, all three key markets in North America witnessed growth. Meanwhile, sales across all other regions reflected marked improvement from the second half of fiscal 2020, driven by improved market share on excellent off-trade channel execution and partial reopening of the on-trade channel in some markets. Encouragingly, management expects the momentum in North America to continue, while the pace of recovery in other regions will be more closely associated with the reopening of the on-trade channel and the level of restrictions applied.
The company remains focused on leveraging its existing e-commerce capabilities and accelerate investments in the online platform to cater to the pandemic-driven shift in consumer shopping behavior. As the online platform has become more relevant amid the pandemic, the company has diverted its efforts to connect with consumers and maintain brand relevance by responding to increased opportunities for at-home consumption occasions. This included new occasions like wanting to enjoy bar-quality drinks at home.
Additionally, the company is positioned to capitalize on the shift in consumption trends to ready-to-drink (RTDs) bar-quality cocktails through the launch of its Crown Royal ready-to-drink canned cocktail line. This will mark the Crown Royal Whiskey brand’s debut in the ready-to-drink cocktail space. Further, the company has inspired consumers with cocktail recipes, new serves and ways to enjoy its brands with food. In the United States and Latin America, it reached customers with new “cocktail to go’ programs. In East Africa, the company explored new ways to get products delivered to consumers’ homes, through partnerships with motorbike delivery companies, known as boda-bodas.
Such well-chalked endeavors might have led this Zacks Rank #3 (Hold) stock to gain 14.4% in the past three months, outperforming the industry’s growth of 12.1%.
However, it continues to witness disruptions in the Travel Retail and on-trade businesses. Going ahead, the Travel Retail business is likely to be negatively impacted due to lesser travelers in the second half of fiscal 2021. Further, high exposure and restrictions in the on-trade channel affected sales in Ireland, Southern Europe, Eastern Europe, Kenya, India, Caribbean and Central America, and Mexico in the first half of fiscal 2021. Notably, the on-trade segment accounts for nearly 40-50% of Diageo’s revenues. Apart from these, continued pressures from cost inflation remain a concern, thanks to the pandemic. The company expects organic operating margin in the second half to be pressured by channel and product mix due to the impacts on Travel Retail and restrictions on on-trade.
Fomento Economico Mexicano (FMX - Free Report) — another Zacks Rank #2 stock — has a long-term earnings growth rate of 9.3%.
The Hain Celestial Group (HAIN - Free Report) delivered an earnings surprise of 26.4%, on average, over the trailing four quarters. It currently has a Zacks Rank #2.
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The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Image: Bigstock
Diageo's (DEO) New Collaboration Center to Support Growth
Diaego plc (DEO - Free Report) opened a new 17,000sq ft. state-of-the-art collaboration center in Stamford, CT, in a bid to catch up with the latest industry trends, advanced technology and category insights. This move will help its distributors and agency partners better understand the changing landscape of the alcoholic beverages industry, which in turn will improve customer experiences.
The center, which comes within the company’s broader Stamford office, will also support its existing global Experience Center located in London. Management also noted that this latest development will set a transformational wave of change across the beverage alcohol industry.
Further, the opening of the new center is in sync with Diageo’s Society 2030 targets, which aim at creating an inclusive and sustainable world. Visitors to the center can interact with live resident mixologists. Moreover, the center will be accessible to those who cannot visit in person through virtual reality technology.
What Else Should You Know?
Diageo has been gaining from increased demand in the off-trade channel, changes in consumer occasions and investments in new opportunities. Further, fast recovery in North America, which is its largest market, has been a key driver. This was backed by strong consumer demand, robust market share growth in the spirits category, positive category mix and uninterrupted stock replenishments by distributors and retailers. Also, all three key markets in North America witnessed growth. Meanwhile, sales across all other regions reflected marked improvement from the second half of fiscal 2020, driven by improved market share on excellent off-trade channel execution and partial reopening of the on-trade channel in some markets. Encouragingly, management expects the momentum in North America to continue, while the pace of recovery in other regions will be more closely associated with the reopening of the on-trade channel and the level of restrictions applied.
The company remains focused on leveraging its existing e-commerce capabilities and accelerate investments in the online platform to cater to the pandemic-driven shift in consumer shopping behavior. As the online platform has become more relevant amid the pandemic, the company has diverted its efforts to connect with consumers and maintain brand relevance by responding to increased opportunities for at-home consumption occasions. This included new occasions like wanting to enjoy bar-quality drinks at home.
Additionally, the company is positioned to capitalize on the shift in consumption trends to ready-to-drink (RTDs) bar-quality cocktails through the launch of its Crown Royal ready-to-drink canned cocktail line. This will mark the Crown Royal Whiskey brand’s debut in the ready-to-drink cocktail space. Further, the company has inspired consumers with cocktail recipes, new serves and ways to enjoy its brands with food. In the United States and Latin America, it reached customers with new “cocktail to go’ programs. In East Africa, the company explored new ways to get products delivered to consumers’ homes, through partnerships with motorbike delivery companies, known as boda-bodas.
Such well-chalked endeavors might have led this Zacks Rank #3 (Hold) stock to gain 14.4% in the past three months, outperforming the industry’s growth of 12.1%.
However, it continues to witness disruptions in the Travel Retail and on-trade businesses. Going ahead, the Travel Retail business is likely to be negatively impacted due to lesser travelers in the second half of fiscal 2021. Further, high exposure and restrictions in the on-trade channel affected sales in Ireland, Southern Europe, Eastern Europe, Kenya, India, Caribbean and Central America, and Mexico in the first half of fiscal 2021. Notably, the on-trade segment accounts for nearly 40-50% of Diageo’s revenues. Apart from these, continued pressures from cost inflation remain a concern, thanks to the pandemic. The company expects organic operating margin in the second half to be pressured by channel and product mix due to the impacts on Travel Retail and restrictions on on-trade.
Stocks to Consider
Compania Cervecerias Unidas, S.A. (CCU - Free Report) , a Zacks Rank #2 (Buy) stock, has an expected long-term earnings growth rate of 11%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fomento Economico Mexicano (FMX - Free Report) — another Zacks Rank #2 stock — has a long-term earnings growth rate of 9.3%.
The Hain Celestial Group (HAIN - Free Report) delivered an earnings surprise of 26.4%, on average, over the trailing four quarters. It currently has a Zacks Rank #2.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>