Late last month, Diageo reported the results of its 2024 fiscal year, which closed at the end of June because fiscal years are arbitrary and time is a construct anyway. As I wrote in a brief Weekender item (a paid-only feature, upgrade if you haven’t, thank you) at the time, the spirits conglomerate posted its first annual loss since 2020, declining 1.4% in net sales and 3.5% in volume for the 12 months prior to June 30th. These are not big dips, but the whole point of investing in a well-diversified multinational firm is reaping slow and steady growth, so naturally Diageo’s stock swooned a bit on the news, though it quickly recovered and is currently trading higher than it was. The stock market: also a construct!
A lot of the overall decline came from Diageo’s 3% drop in “organic” (read: non-acquired) sales in the United States, its most important market. Plenty of that came from the 22% tumble in sales of the distiller’s once seemingly invincible Casamigos tequila line, which Big D1 acquired in 2017 for a deal worth up to a billion dollars from George “Biden… Old Now?” Clooney. It’s appealing to interpret this slide as a softening of the red-hot tequila segment, but I actually don’t think that’s really what it means. Americans aren’t turning their backs on good tequila, and Casamigos might be fucked in the infinite-growth-forever paradigm of the publicly traded corporation to which it belongs. Both can be true. Let’s unpack that a bit.