Diageo Suffers Volume Slowdown in 1H Fiscal 2023; Canary in the Coalmine for the U.S. Consumer?

In the first half of fiscal 2023, it was evident that Diageo's volume growth has begun to cool in some key markets. We lowered our full-year volume growth assumption modestly, but this has no impact on our fair value estimate, which remains GBX 3,200 for the ordinary shares. Although investors may be disappointed by this volume miss, our thesis that Diageo will generate faster long-term growth remains firmly intact, and we view the pullback in the shares to be appropriate, given the frothy expectations being priced in recently.