VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Tuesday, December 30, 2025
Diageo plc
DGE · London Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Diageo plc is a global beverage alcohol company with a spirits-led portfolio and Guinness, selling in nearly 180 countries. Its core moat is demand-side brand trust across premium categories, reinforced by route-to-market execution and marketing scale. A supply-side barrier exists in aged spirits where large maturing inventories take years to build. Key risks include consumer downtrading, category competition (especially tequila and RTDs), and regulatory/tax changes. Market cap shown here uses FactSet via Citi ADR profile (as of 2025-12-29): https://www.citiadr.factsetdigitalsolutions.com/stocks/profile?id=US25243Q2057
Primary segment
Spirits
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
3 segments · 8 tags
Updated 2025-12-30
Segments
Spirits
Branded premium spirits (whisky, tequila, vodka, gin, rum, liqueurs)
Revenue
76%
Structure
Oligopoly
Pricing
strong
Share
—
Peers
Beer (Guinness and other beers)
Beer and stout (with emphasis on Guinness)
Revenue
18%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Ready-to-Drink (RTDs)
Spirit-based ready-to-drink beverages (canned cocktails and branded RTDs)
Revenue
4%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
Spirits
Branded premium spirits (whisky, tequila, vodka, gin, rum, liqueurs)
Revenue share derived from FY2025 preliminary results table 'Reported net sales by category %' (Spirits 76%). Source: https://www.diageo.com/~/media/Files/D/Diageo-V2/Diageo-Corp/press-release/2025/f25-preliminary-results-press-release.pdf
Brand Trust
Demand
Brand Trust
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Portfolio of premium spirits brands supports willingness-to-pay and prioritisation in distribution and shelf space.
Erosion risks
- Consumer downtrading in downturns
- Rising competition in tequila and premium whisky
- Regulatory/tax hikes reducing affordability
Leading indicators
- Price/mix vs volume contribution
- Market share trend in key categories (scotch, tequila, vodka)
- Brand health metrics and A&P efficiency
Counterarguments
- Premium spirits are not immune to substitution when consumers trade down
- Competitors can outspend in specific categories/regions for periods of time
Distribution Control
Supply
Distribution Control
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Route-to-market capability and key account focus improve in-market execution and share performance.
Erosion risks
- Distributor consolidation increases customer bargaining power
- Regulators restrict distribution practices or promotions
- Execution slippage during route-to-market transitions
Leading indicators
- Share gains/losses in measured markets
- Distributor depletion vs shipment alignment
- On-trade and off-trade distribution points
Counterarguments
- Competitors can access many of the same distributors and retailers
- Distribution advantages can be competed away with incentives and promotion
Capacity Moat
Supply
Capacity Moat
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Large stocks of maturing spirits (notably whisky) take years to build, creating a time-based capacity barrier and smoothing supply availability.
Erosion risks
- Category demand shifts can leave excess aged stock
- Quality/cask management issues reduce usable inventory
- Competitors also hold significant aged inventories
Leading indicators
- Maturing inventory balance and write-downs
- Allocation and out-of-stock frequency around key brands
- Gross margin stability through cycle
Counterarguments
- Aged inventory is valuable only if demand remains strong for those styles/brands
- Other global players also have meaningful aged whisky stocks
Beer (Guinness and other beers)
Beer and stout (with emphasis on Guinness)
Revenue share derived from FY2025 preliminary results table 'Reported net sales by category %' (Beer 18%). Source: https://www.diageo.com/~/media/Files/D/Diageo-V2/Diageo-Corp/press-release/2025/f25-preliminary-results-press-release.pdf
Brand Trust
Demand
Brand Trust
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Guinness is a flagship brand with durable brand equity, supporting premium positioning in stout and strong activation-driven demand.
Erosion risks
- Changing consumer preferences within beer (health/moderation trends)
- Supply constraints or quality issues impacting on-trade availability
- Aggressive promotion by large global brewers
Leading indicators
- Guinness share trends in key markets
- On-trade distribution and draught throughput
- Availability/supply constraint mentions in results
Counterarguments
- Beer is highly competitive and promotion-driven; brand advantage can narrow
- Stout is a niche segment in many markets
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 1 evidence
On-trade execution and rollout of draught formats expand distribution points and reinforce brand visibility.
Erosion risks
- On-trade traffic decline or channel shifts
- Distributor/pricing pressure in key markets
- Competitors improve draught quality/service levels
Leading indicators
- Number of on-trade outlets carrying Guinness variants
- Draught format mix (incl. Guinness 0.0)
- On-trade share gains/losses
Counterarguments
- Large brewers often have comparable distribution reach and on-trade incentives
- Distribution gains can be temporary if supply tightens
Ready-to-Drink (RTDs)
Spirit-based ready-to-drink beverages (canned cocktails and branded RTDs)
Revenue share derived from FY2025 preliminary results table 'Reported net sales by category %' (Ready to drink 4%). Source: https://www.diageo.com/~/media/Files/D/Diageo-V2/Diageo-Corp/press-release/2025/f25-preliminary-results-press-release.pdf
Brand Trust
Demand
Brand Trust
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 2 evidence
RTD launches can piggyback on established spirits brands, improving trial and shelf placement versus new RTD-only brands.
Erosion risks
- Category saturation and rapid SKU turnover
- Regulatory differences by state/country for RTD distribution and taxation
- Brand dilution if RTD quality perception is weak
Leading indicators
- RTD depletion trends vs shipments
- Shelf space and distribution point counts
- Gross margin and promo intensity in RTDs
Counterarguments
- RTDs are easy for competitors to copy and private label can pressure pricing
- Consumers may treat RTDs as convenience purchases with low loyalty
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Ability to access key accounts and existing route-to-market infrastructure reduces time-to-scale for new RTD SKUs.
Erosion risks
- Distributor incentives shift to competing RTD portfolios
- Supply chain complexity for fast-rotating SKUs
- Retailer private label expansion
Leading indicators
- Velocity per point of distribution
- New SKU launch success rate and repeat purchase indicators
- Distributor inventory levels and returns
Counterarguments
- Distribution in RTDs is broadly accessible to large beverage players
- Shelf space is constrained; incumbency in RTDs can matter more than spirits heritage
Evidence
broad portfolio of iconic brands
Company positions its scale brand portfolio as a competitive advantage in beverage alcohol.
#1 in international spirits
Annual report highlights Diageo leading position in international spirits by retail sales value.
route-to-market ... key accounts
Diageo highlights investment in route-to-market capability building and key accounts in the US.
Maturing inventories 8,677
Disclosed maturing inventory balance indicates substantial aged stock that cannot be replicated quickly by new entrants.
enduring strength of the brand
Management links Guinness performance to enduring brand strength in FY2025.
Showing 5 of 9 sources.
Risks & Indicators
Erosion risks
- Consumer downtrading in downturns
- Rising competition in tequila and premium whisky
- Regulatory/tax hikes reducing affordability
- Distributor consolidation increases customer bargaining power
- Regulators restrict distribution practices or promotions
- Execution slippage during route-to-market transitions
Leading indicators
- Price/mix vs volume contribution
- Market share trend in key categories (scotch, tequila, vodka)
- Brand health metrics and A&P efficiency
- Share gains/losses in measured markets
- Distributor depletion vs shipment alignment
- On-trade and off-trade distribution points
Curation & Accuracy
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