US Watchdog investigates ‘Diageo business operations in certain markets’

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In an interim report released Thursday, the company said it had “received an investigation” from the SEC, “requesting information relating to Diageo’s business operations in certain markets, as well as its policies, procedures and compliance environment. “.

Information request

The group said: “Diageo is responding to this request for information, but is unable at this time to assess whether the investigation will evolve into an enforcement action or, should it occur, to quantify in any way material the possible loss or extent of loss, if any, to which such action might give rise.

Respond to a request for Business Post, a Diageo spokeswoman said: “We have received and are responding to a request for information.”

An SEC spokesperson told the newspaper that the agency “does not make any comments beyond public filings.”

In 2020, Diageo was fined $5 million after the SEC found it had “significantly misled” investors about demand for its beverages by concealing unwanted inventory sales from distributors.

The US agency noted that the North American arm of the world’s largest spirits maker had been accused of violating securities law by failing to disclose key information to shareholders.

He noted that Diageo had pushed distributors, who act as intermediaries in the US three-tier liquor sales system, to take on excess inventory to help it meet its sales targets. Diageo then failed to disclose excess inventory of its most profitable unit to investors, which made its market filings “materially misleading to investors with respect to its financial results,” according to the SEC.

The SEC accepted an offer from Diageo to settle the charges, which related to fiscal years 2014 and 2015, by paying a $5 million fine and agreeing to cease and desist further violations, without admitting or denying the findings of the SEC.

Diageo S2 2021 results

In its interim results for the second half of 2021, the beverage giant reported overall organic sales growth of 27% in Europe, with the territory contributing 22% of Diageo’s reported net sales.

It recorded a 44% growth in beer sales in Europe, while spirits sales increased by 27%.

Diageo posted an overall increase in operating profit of 22.5% to £2.7bn in the six months to December 31, while reported net sales rose 15.8% , to £8.0 billion.

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