Momentum Still With Diageo After Outstanding Full-Year 2022, but Clouds Loom Next Year

Diageo beat our full-year estimates in an impressive second half of fiscal 2022, wrapping up an outstanding year for the spirits maker. Second-half consolidated organic sales growth of almost 28% year over year is likely to be among the strongest growth numbers reported among our consumer staples coverage this season. Business momentum is very strong and Diageo is a safer inflation hedge than most of its peers, but it seems likely that conditions will become more difficult next year. The company will cycle the impressive 21% full-year revenue growth in 2022, and also because both volume and mix are likely to come under pressure as consumers suffer from the pressures on disposable income and due to softening asset prices.