Diageo's Wide Moat Is Robust Against Cyclical Weakness

Diageo was formed in 1997 following the merger of Grand Metropolitan and Guinness. Mergers and acquisitions remain part of the firm's fabric, and subsequent transactions have established Diageo as a global industry leader. The largest spirits players have expanded and scaled their portfolios over decades, holding as many as 250 brands, and we believe there is more consolidation to come. Outside the top five firms, the industry is highly fragmented, and regional players often dominate in niche product categories or local markets. These firms present acquisition opportunities for the industry consolidators, including Diageo, to expand their footprint.