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Diageo remains in play as CMO departs

The long-term investment case remains intact as the booze group's chief marketing officer heads for pastures new
Diageo remains in play as CMO departs

The Drinks Business recently reported that 31Dover, one of the UK’s largest online liquor distributors, saw a 400 per cent spike in sales after the lockdown measures were introduced last month. Indeed, I recall walking into my local Co-Op on the day after Boris Johnson closed all the pubs and noticed that the wine and beer shelves had been virtually stripped bare.

IC TIP: Buy at 2,507p

People like a drink, particularly when they’re under stress. And there can be few companies better placed to meet that need than Diageo (DGE). But it will have to do without its long-serving chief marketing officer, Syl Saller, who is to retire after 20 years with the group, even though you wouldn’t imagine it would be difficult to market booze under the current circumstances. To help her on her way, she has hived off 5,000 American depository shares (ADRs) garnering $642,577 (£523,022) in the process.

The drinks giant, which numbers Smirnoff, Johnny Walker and Guinness among its global brands, is donating 2m litres of alcohol in the fight against Covid-19, not for consumption, but for use in hand sanitisers. The move is commendable, although at risk of seeming cynical, it’s also good PR at a time when the business is under pressure through the pub/bars closure and logistical challenges.

Based on previous bear markets, we might reasonably assume another significant down leg is in the offing – it would be unrealistic to think the market has bottomed out. So, with activity in the licensed trade constrained, the group is likely to take a significant hit to earnings and cash flow, although it will be illuminating to learn how off-licences fare during the lockdown. Another thing to watch is if the group is thinking of reassigning any of the £3.38bn in near-term debt obligations.

Buys      
CompanyDirector/PDMRDateNo. of sharesPrice (p)Aggregate value (£)Comments
3iSimon Borrows (ceo)27 Mar 20100,000771.34771,000 
3iJulia Wilson27 Mar 2031,900769.97245,620 
3iJulia Wilson27 Mar 20295765.312,258 
The Restaurant GroupKirk Davis (cfo)30 Mar 20276,79735.9399,453 
VolexJohn Molloy30/31 Mar 20126,921109138,344 
3iPeter Wirtz31 Mar 2045,000780351,000 
DraxWill Gardiner (ceo)31 Mar 2097,500153.07149,243 
HostelworldCarl Shepherd31 Mar 2020,00056.111,220

Converted from $. Remaining Hostelworld trades conducted in £

Spire HealthcareSimon Rowlands1-3 April 20258,00077.19199,150 
HostelworldMichael Cawley (ch)2 Apr 2045,00054.524,525 
DraxAndrew Koss2 Apr 2032,247154.4949,818Aggregate price
VolexDaren Morris2/3 Apr 2020,00011122,200 
NorcrosSusan Kelsall3 Apr 20200,000121242,000

Wife of Nick Kelsall, ceo

NorcrosShaun Smith3 Apr 2015,00012118,150 
HostelworldEimear Moloney3 Apr 2040,00054.521,800 
MeggittGuy Berruyer6 Apr 2025,000251.3262,830 
Sells      
CompanyDirector/PDMRDateNo. of sharesPrice (p)Aggregate value (£)Comments
DiageoSylvia Saller31 Mar 205,00010,462523,022

American Depositary Shares