) recently announced that it is expanding its Chateau & Estate
Wine portfolio by adding three more varieties: Stark Raving,
Butterfly Kiss and Rose'N'Blum.
The company expects to distribute them throughout the U.S. by
the end of summer 2012. The new flavors are targeted towards young
wine lovers preferring non-traditional tastes.
Stark Raving wine labels have two variants -- Stark Raving Red
and Stark Raving White. The winemaker of Star Raving wines also
plans to add a Malbec variant from Argentina and a French Cabernet
to the brand's line up.
Butterfly Kiss wine labels offer brands like Chardonnay, Pinot
Grigio and Pink Pinot Grigio. Another flavor called Mosato is
scheduled to join the lineup soon. As for Rose'N'Blum, it
offers brands like Rose'N' Blum Pinot Grigio and Pink Moscato.
Diageo's Chateau & Estate Wines manufactures and markets
premium wines from vineyards around the world, including Napa
Valley, Sonoma, the California Central Coast, Argentina, France,
Italy, New Zealand and Australia. Diageo Chateau & Estate Wine
also imports Bordeaux and Burgundy estate-bottled wines.
Apart from wine, Diageo's collection includes a wide range of
brands across spirits, including Johnnie Walker, Guinness,
Smirnoff, Baileys, Cuervo, Tanqueray, Captain Morgan and Crown
The company is on an expansion spree to boost its spirits
portfolio, and has announced an investment plan in Scotch whiskey
production. As a part of the investment plan, Diageo plans to build
a major new malt distillery and also expand its existing ones. New
warehouses are scheduled to come up to store the extra amount of
spirit that will be brewed as a part of the expansion plan.
In June 2012, Diageo bought Cabin Fever Maple Flavored Whiskey,
a move that will allow the company to tap the growing markets of
flavored whiskey and craft distilling.
Diageo started its new restructuring program in fiscal 2011.
Under the program, Diageo is reviewing its operating model with an
objective to improve the effectiveness and productivity of the
group's operations and deploy resources closer to the market as
well as in the geographical regions where the potential for growth
is highest. We are optimistic regarding the effectiveness of the
model once it becomes operational by June 2013.
However, the recent economic uncertainty has adversely affected
Diageo, as customers are opting for lower-priced brands over
premium ones. The effect due to this change in consumers' spending
pattern was reflected through the company's weak performances in
Nigerian and European markets during the first half of fiscal 2012.
A sluggish recovery in these markets is expected to negatively
impact the demand for Diageo's premium offerings and in turn affect
its top-line growth.
Diageo closely competes with
Molson Coors Brewing Company
). Currently, we have a long-term Neutral recommendation on Diageo,
which carries a Zacks #3 Rank (short-term Hold rating).
DIAGEO PLC-ADR (DEO): Free Stock Analysis
(SBMRY): ETF Research Reports
MOLSON COORS-B (TAP): Free Stock Analysis
To read this article on Zacks.com click here.