Diageo Share Price Has Fallen 16.2% This Year, Can It Recover?

The Diageo plc (LON: DGE) share price has fallen 16.2% since the year started and is still headed lower. Can the share price recover? The short answer is yes; the DGE share price can recover, but it might take a while to see a rebound in the stock price.

The company usually experiences a boom during the busy holiday season, and we can expect the same scenario this year as people indulge in merry-making during the festivities, which could be the right trigger for the DGE to reverse course and head higher.

The alcoholic drinks company recently issued a trading commentary ahead of its AGM, where its new CEO, Debra Crew, introduced herself to shareholders, stating her excitement to join the company and help it continue growing despite the challenging operating environment. 

Diageo recently lost the first round of a legal battle with rapper Sean “Diddy” Combs regarding the promotion and distribution of DeLeón, a premium tequila brand the two parties acquired in 2014. Combs argues that Diageo had underinvested in DeLeón and the vodka brand Cîroc and categorised them as “black brands” that should be sold to “urban” consumers.

Combs has accused Diageo of racial discrimination, claiming that his DeLeón was distributed in 3% of all possible outlets, compared to 34%, 36% and 14% for rival tequilas Casamigos, Don Julio and 21 Seeds, respectively. 

On the other hand, Diageo claims that Combs needed to invest the amount he was supposed to invest in marketing the brand, as he only invested $1,000. Diageo invested over $100 million in marketing the brand, yet Combs was a 50% owner. 

Debra Crew, Diageo’s Chief Executive, commented: “As I take the helm as Chief Executive of Diageo, I am excited to lead our teams around the world and by the many growth opportunities we see in front of us. Our expectations for fiscal 24 are unchanged from when we reported our fiscal 23 preliminary results on 1 August. While we expect operating environment challenges to persist, with ongoing cost pressure and geopolitical and macroeconomic uncertainty, we will move with speed and agility and continue to invest in marketing and innovation. I am confident in the resilience of our business and our ability to navigate these headwinds while executing our strategic priorities.”

Diageo share price. 

The Diageo share price has fallen 16.22% since the year started amid negative investor sentiment.