Diageo (DEO) shares were on the chopping block for UK fund manager Terry Smith during 2024, with the veteran investor questioning whether the spirits and brewery company will be up to the potential challenge posed by GLP-1 weight-loss drugs on alcohol producers.
In his annual message to Fundsmith clients, Smith this week cited growing signs GLP-1 drugs, including Novo Nordisk's (NVO) Wegovy and Ozempic, also work to suppress users desire for alcohol to explain why he sold his stake in the maker of Johnny Walker whisky and Guinness ale.
"We suspect the entire drinks sector is in the early stages of being impacted negatively by weight loss drugs," Smith wrote, later noting it appears likely GLP-1 medications will also be soon used to treat alcoholism. He also chided management at Diageo for "a lack of information" about collapsing demand for its brands in Latin America beginning in late 2023.
Diageo did not immediately respond to a request from MT Newswires on Thursday seeking comment. The company's shares did not trade in the US on Thursday due to a market holiday but closed 1.2% higher on the London Stock Exchange.
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