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Scoop: Diageo seeks to offload Harp and other beer brands

Illustration of a bottle cap with the design from a quarter on it.

Illustration: Brendan Lynch/Axios

Spirits distributor Diageo seeks to divest the rest of its beer portfolio aside from its flagship brand Guinness, sources familiar with the company tell Axios.

Why it matters: The London-based distilling and brewing conglomerate could face a difficult buyer's market, with spirits' revenue share eclipsing beer for the first time this year.

Details: Among the beer brands Diageo could look to sell are Smithwick's, Kilkenny and Harp Lager, based in Ireland, and Tusker in Kenya, among others, the sources say.

  • Aside from Guinness, the beer brands are a margin drag on the rest of the business, sources say.
  • Diageo has been weighing the potential offload of its beer portfolio for the past decade, one source says.

Of note: A search of Diageo's annual report and website turns up barely a mention of its beer brands other than Guinness, on which it has focused all its resources.

Zoom in: Diageo did increase its stake in East African Breweries earlier this year to 65% from 50%.

  • Through that entity, which makes Guinness for the region, it controls not only Tusker but also makes Senator Keg, among others.

Catch up fast: Diageo has been paring its beer portfolio.

Reality check: Buyers may be hard to come by, given beer businesses, including craft, have fallen out of favor, sources say.

  • Sponsors are hesitant because of a difficult debt financing market and concerns about being able to exit their investments, the sources say.
  • Large strategics, given all the consolidation, don't have much room left to add more brands, a source says.

Diageo declined to comment.

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