Can the Diageo share price keep breaking records?

Diageo, the beverage company that owns brands like Guinness and Johnnie Walker, continues to see its share price go from strength to strength, with is stock climbing more than 22% since January to £33.28 a share.

The company’s gains come from it consistently delivering a strong performance, with the business recording a 5.8% rise in net sales to £12.9 billion and a 9.5% increase in operating profit to £4 billion in its 2019 annual results.

‘These results reflect the steady progress we are making and as we look ahead we see attractive opportunities to deliver consistent growth and create shareholder value,’ Diageo CEO Ivan Menezes said.

And with the business targeting organic operating profit growth in the range of 5% to 7% in 2020 and returning £4.5 billion to shareholders over the next three years its stock looks likely to climb higher.

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Diageo targets teetotallers with Seedlip deal

Diageo, which owns alcoholic brands like Bailey’s Smirnoff, recently diversified its portfolio of brands in response to the rise in teetotallers, increasing its holding in non-alcoholic spirit brand Seedlip.

The deal, which was announced on Wednesday, sees the beverage company acquire a majority stake in Seedlip, which is a best described as a non-alcoholic substitute to gin.

Over the last 12 months, Diageo has invested in low-alcohol alternatives, with it launching Guinness Pure Brew, a 0.5% version of the dry stout that originated in Dublin, Ireland.

In a recent report by consumer researcher Nielsen, over 25% of British consumers said they wished to cut down on their alcohol consumption and are interested in low-alcohol alternatives to help achieve this goal.

‘In the last year, £43m was spent on no/low alcohol beers, an increase of 28%,’ Nielsen said. ‘Volume has increased by 21% and works out to the equivalent of over 12.2 million pints sold in the latest year.

‘More brands are entering this sector of beer, with the biggest of the new brands being Heineken 0.0% and Budweiser Prohibition Brew.’

Diageo’s success in this new market will play an important part in the company’s stock continuing its march upwards.