Addressing The Premiumisation Hangover

Research evidence excerpt

Addressing The Premiumisation Hangover

EUROPE | Beverages

Diageo EquityJuneResearch7, 2026

TARGET | ESTIMATE CHANGEAddressing The Premiumisation Hangover

Whilst premiumisation will remain a secular tailwind for spirits, we think RATING BUY

Diageo has left money on the table by not catering to a broader range of PRICE 1,473.00p^

consumers. Given squeezed consumer wallets, we show in this report how PRICE TARGET | % TO PT 2,000.00p (1,900.00p) |

Diageo will start to rebalance premiumisation and affordability to chart a +36%

52W HIGH-LOW 2,142p - 1,350p

path to recovery. Strategy update 6 Aug should provide a floor on earnings

FLOAT (%) | ADV MM (USD) 85.2% | 100.86

and represents a clearing event. PT to £20. Cal 2027E PE 12.6x vs staples

MARKET CAP £36.6B | $49.2B

16x.

TICKER DGE LN

^Prior trading day's closing price unless otherwise

Why have we written this report? The market narrative is that DGE has over-premiumised and noted.

is suffering from a premiumisation hangover. Over the med-term, the move to "drink less but

better" will remain an enduring trend; however, discretionary spending is under pressure and, in RATING BUY

our view, DGE's over-premium bias in certain categories is leaving money on the table. Rather TICKER DEO US

than wait for the cycle to turn, we expect DGE to take active steps to adjust the portfolio to be PRICE $78.94^

more competitive/resilient.

PRICE TARGET | % TO PT $108.00 | +37%

What has surprised us from our work? From analysis of nearly 2,000 inputs, which reflect the

category/price point exposures for Diageo's top 20 markets (79% of sales), we estimate that FY (Jun) CHANGE TO JEFe JEF vs CONS

only c.16% of Diageo's portfolio is at risk of a premiumisation hangover, with tequila the main 2026 2027 2026 2027

culprit.