Diageo targets further acquisitions in emerging markets

Diageo anticipates big growth from developing countries in the medium-term, and is planning further acquisitions in these markets given difficult trading conditions in mature markets such as Europe and North America.

Chief executive Paul Walsh predicts that the spirits giant will generate half its sales from emerging markets within three to five years. He said this would be driven by acquisitions as well as soaring demand among the expanding middle classes for its products, which include Johnnie Walker Scotch whisky and Smirnoff vodka.

Countries singled out by Walsh include India, Mexico, Colombia, South Africa, Nigeria and Ethiopia.

Diageo recently bought Turkey’s largest spirits producer, Mey İçki, and Walsh has hinted that more deals are on the horizon.

Delivering Diageo’s most recent results, he said: “We will invest in the business that we currently have to make sure that our infrastructure, particularly in the emerging markets, can deliver on the growth potential of that market.

“We are very mindful of M&A opportunities. And you saw in the first half we moved in Tanzania, we've moved in Vietnam and I would hope that we can continue to find such opportunities and deploy our cash flow accordingly. Those are the priorities.”