Third quarter company sales slumped 19% in Asia and saw feeble results in other emerging markets including Africa and Russia. This amounted to an overall fall of 1.3% in the first nine months of the firm’s financial year, sparking a slide in the share price on Thursday.
But adverse results are not reason to jump ship and abandon stocks, according to Train, who manages the Finsbury Growth & Income Trust. Diageo is the biggest investment across the Finsbury Growth & Income trust for the past 6-7 years.
Earlier this year, Databank confirmed that Diageo owns the world's #1 and 2 spirits brands by value: Johnnie Walker and Smirnoff, and in total speaks for 23% of the value of the world's top100 spirits brands.
“This is more than any other company, before considering it also brews Guinness, another of the great global beverage brands,” Train said.
Suntory's bid to buy Jim Beam earlier this year is another illustration of how valuable such brands are to other corporates and a good reason to maintain a strategic investment in Diageo.
However, no company is perfect or exempt buffeting from macro-economic or political problems and Diageo appears to be grinding through a phase when a lot of such issues have arisen, according to Train.
“What is important is to know how to react to such (modest) disappointments. We say for Diageo and a few other companies with such wonderful brands that trading or share price setbacks are a rare and valuable opportunity to buy more.”
“You know that as soon as the news turns positive again the shares will race ahead,” he added.
