Why Diageo’s Slump Is an Opportunity for Investors

On the Feb. 5, 2026, bonus episode of The Morning Filter podcast, host Susan Dziubinski talked with Morningstar Chief Europe Market Strategist Michael Field about international investing. Here’s an excerpt from the show about one of Field’s top picks.

Why Diageo’s Slump Could Signal Opportunity for Investors

Dziubinski: Your second pick is from the consumer defensive sector. It’s Diageo DEO. And actually, Diageo was one of Dave’s [Sekera] picks in 2025, too. Now, the stock was down more than 30% last year on weakened consumer demand. Walk us through the story here, Michael. Why do you like the stock today?

Field: I’m not sure Dave will love that you’re highlighting that; it fell after he’s recommended it. But I think what that says to me is that now is an even better time to buy the stock. And it’s one I actually own myself. And again, this comes back to what we spoke earlier about consumer defensive stocks, right? Diageo is a global name in spirits and in beer, the owner of Guinness, of course. When we went through a slump in beer sales seven or eight years ago, this was one area that people talked up and said, “Well, young people are drinking more spirits now.” And Diageo was at the forefront of this. But everything’s cyclical, and that’s kind of faded a little bit, too. And I think the structural trend here is, yes, people are drinking less. That’s well documented, but I think that’s been a long-term trend. And that hasn’t explained the share price fall to the degree it has over the last number of years. That comes back more to the story that we spoke earlier about inflation being high and people not being able to afford what they’d like to in terms of these kinds of products. But certainly, with inflation falling, this company’s costs should be going down. And indeed, with people with more money in their pockets, with wages having caught up, you should see a turn of fortunes for this. And I think this is, again, one of those companies that’s globally diversified across brands and countries. So, I think it’s in a pretty strong position. And when you see the valuation as low as this, I think that’s a pretty good sign that now is the time to get involved.

Diageo’s New CEO Brings Optimism for Recovery

Dziubinski: Diageo has a new CEO as of Jan. 1. Any thoughts on what he brings to the table or changes he might make?

Field: [Dave Lewis] comes with a solid reputation, having come from Unilever UL and the UK supermarket Tesco TSCO. With the nickname of Drastic Dave, you can tell that something big is going to happen with the company. What is going to happen, we’re not fully aware of the details. But one thing that I would say is that Diageo has a pretty big debt pile at the moment. It’s not unmanageable, but certainly it could be trimmed. And there are a lot of things you could do there around the edges that could already have a benefit to the share price. And that’s kind of giving me some optimism, at least, with his appointment.

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