Diageo PLC DEO, a leading global beverage alcohol company, has announced plans for a new 360,000-square-foot manufacturing and warehousing facility in Montgomery, AL. This strategic expansion aims to enhance supply chain resilience and drive long-term growth. The facility will boast a multi-million case annual production capacity, supporting Diageo’s portfolio of leading beverage alcohol brands.

Insights Into Diageo’s Investment in Montgomery Facility

DEO plans to invest $415 million in building this new facility in Montgomery, AL. This investment is expected to generate 750 construction jobs and create approximately 100 permanent jobs in Montgomery once operations begin. The site is scheduled to be fully operational in the second half of 2025.

From a financial standpoint, Diageo's investment in the new facility is expected to boost Diageo’s production capacity, potentially leading to increased market share and revenue growth.

This manufacturing and warehousing facility aims to strengthen Diageo’s North American supply chain operations and fuel growth in its export business. The company has named the new facility ‘Diageo Montgomery,’ which will serve as a strategic operations hub, bringing the company closer to its beverage distributors in the southern region. Its strategic location is expected to reduce road travel, helping to lower carbon emissions from logistics operations.

Also, the facility will incorporate state-of-the-art technology to optimize water and energy efficiency, reinforcing the company’s commitment to sustainability and operational excellence. It will contribute to the economic development of Montgomery and community leaders for their continued support. It is anticipated that the new facility will bring business closer to customers and distributors in the South, and enable a broader supply network to operate more efficiently and sustainably.

Diageo’s decision to open a state-of-the-art facility in Montgomery highlights Alabama’s ability to attract world-class companies and drive economic growth. The new hub will create high-quality jobs, bolster Alabama’s reputation and reinforce its appeal as a prime location for global investment. This project is a key element of Diageo’s broader multi-year strategy to enhance its global supply chain, improve resilience and agility, drive productivity savings and promote sustainability.

More About Diageo Stock

Diageo is focused on investing in strategic initiatives to drive long-term organic growth, with a clear vision to increase its value share in the beverage alcohol sector by 50%, reaching 6% by 2030. The company is on track to meet its medium-term guidance for fiscal 2023-2025, targeting organic sales growth of 5-7% and organic operating profit growth in line with net sales growth.

In line with its growth strategy, Diageo is progressing well with its new productivity commitment, aiming to deliver $2 billion in productivity savings from fiscal 2025 to fiscal 2027. This plan focuses on improving cost efficiency across costs of goods, marketing spending and operating overheads. Diageo will support this acceleration through investments, including its supply chain agility program announced in 2022. The company anticipates benefits from this program to increase starting in fiscal 2025, with further acceleration in subsequent years.

Despite these positives, Diageo has faced significant challenges in the Latin America and Caribbean (LAC) and North America regions, which negatively impacted the company’s financial results in fiscal 2024. The LAC region, which represents 10% of Diageo's net sales, has seen a marked decline in performance. This was primarily due to rapidly shifting consumer sentiment, which led to elevated inventory levels and required adjustments by wholesalers and customers throughout the year.

Shares of this Zacks Rank #4 (Sell) company have lost 2.2% in the past three months compared with the industry’s decline of 14.6%.

DEO Stock's Past Three-Month Performance

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Key Picks

We have highlighted some better-ranked stocks from the broader Consumer Staples space, namely Freshpet, Inc. FRPT, Vita Coco Company COCO and The Boston Beer Company SAM.

Freshpet, together with its subsidiaries, manufactures, distributes and markets natural fresh meals and treats for dogs and cats, and currently sports a Zacks Rank #1 (Strong Buy). FRPT delivered an earnings surprise of 144.5% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Freshpet’s current fiscal year’s sales and earnings implies growth of 27.2% and 228.6%, respectively, from the year-ago reported number.

Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank of 2 (Buy). COCO has a trailing four-quarter earnings surprise of 17.6%, on average.

The Zacks Consensus Estimate for COCO’s current financial-year sales and earnings suggests growth of 3.8% and 29.7%, respectively, from the year-ago reported figures.

Boston Beer is one of the largest craft brewers in the United States. The company produces beer, malt beverages and cider products at company-owned breweries and under contract. Boston Beer currently has a Zacks Rank #2.

The Zacks Consensus Estimate for the company’s 2025 earnings implies growth of 35.3% from the previous year’s reported number. SAM has a trailing four-quarter average earnings surprise of 154.6%.

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