Diageo Launches 3rd Orphan Barrel Whiskey: Rhetoric - Analyst Blog


Amid declining consumption of premium spirit in the U.S. and Europe, brewers around the world are leaving no stones unturned to attract traffic to their stores and boost sales. After witnessing volume declines in its key markets in the past couple of years, U.K.-based brewer Diageo plc ( DEO ) has undertaken several strategic initiatives to maintain the top line at a decent level.

After the remarkable success of the two Orphan Barrel whiskey variants launched recently, Diageo has come up with a third variant - the Rhetoric Whiskey. It is a limited edition craft bourbon which will be released over the years after the completion of the ageing process. The 20-year old variant is scheduled to release in 2014; the 21-year old variant will come up in 2015. Older variants will be released gradually.  

In Feb 2014, Diageo started the Orphan Barrel Whiskey Distilling Company to source rare and old whiskeys from distilleries around the world. Orphan Barrel Whiskey launched two variants of old whiskey - 20-year-old Barterhouse Whiskey and 26-year-aged Old Blowhard Whiskey - at selected locations in March. (Read: Diageo to Launch Rare Whiskeys )

The Rhetoric Whiskey was sourced from the Stitzel-Weller facility in Louisville, KY and is priced at $85. Diageo started the restoration of the historic Stitzel-Weller Visitor Center in May. The Stitzel-Weller Distillery in Shively, operational since Derby Day 1935, stores and rests barrels of various whiskies. (Read: Diageo Restores Louisville Facility )

On Apr 17, 2014, Diageo reported interim management statement for the third quarter of fiscal 2014 ended Mar 31. Organic net sales (i.e. total revenue minus excise duties) declined 1.3%. Volume slipped 1.0% from the year-ago period due to unfavorable currency translations and lower consumer confidence resulting from the ongoing macroeconomic headwinds. (Read: Unfavorable Fx Lowers Diageo Q3 Sales )

The Zacks Rank #4 (Sell) stock is increasing marketing investment in all the geographical segments, with greater focus on the premium brands. The company owns brands such as Johnnie Walker, Smirnoff and Guinness and has been exploring opportunities to expand geographically through acquisitions.

Other stocks in the consumer staples sector worth considering are The Hain Celestial Group Inc. ( HAIN ) , Inventure Foods Inc. ( SNAK ) and TreeHouse Foods Inc. ( THS ). While Hain Celestial carries a Zacks Rank #1 (Strong Buy), Inventure Foods and TreeHouse Foods carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: HAIN , DEO , SNAK , THS



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