Diageo Plc Blends It Like Beckham

Diageo (LSE: DGE) (NYSE: DEO.US) already owns some of the fanciest beverage brands in the world. Now the drinks giant hopes a deal with midfield maestro David Beckham and the entrepreneur Simon Fuller – the man who brought us the Spice Girls and Pop Idol — will give its liquor business even more sparkle.

Beckham, Fuller and Diageo are pooling their combined talents to launch Haig Club Single Grain Scotch Whisky. And this is much more than just a promotional deal — according to Diageo, Beckham will play a “fundamental role” in developing the brand and its positioning.

The company also stresses Beckham will be involved in responsible drinking campaigns, which is something the footballer will doubtless be keen to highlight himself, too.

Of course, Beckham didn’t just rock up in Scotland with a bright idea for a Scotch blend (although he did surprise Diageo workers with a flying visit to their plants earlier this year – and now we know why!)

Haig Club hails from the House of Haig, which Diageo claims is Scotland’s oldest grain whiskey distillery. House of Haig already makes Diageo’s niche Dimple Scotch Whisky brand, so Diageo is calling on a deep bench of talent to create Haig Club.

Beating the penalty shootout

Of course, Diageo’s most famous whisky brand –and a lynchpin of the company’s £11 billion in annual global sales – is its Johnnie Walker brand.

diageoThe company claims that Johnnie Walker Red Label is the biggest selling Scotch whisky worldwide. Meanwhile, Johnnie Walker Black Label was a favourite tipple of Winston Churchill.

While sales of Johnnie Walker and Diageo’s other brands have continued to tick along nicely on a global basis, the drink has seen sharp declines in China, which was until recently a very strong growth market. A crackdown on gift giving and government extravagance in that country saw sales of Johnnie Walker slump over 10% in the most recent period.

Beckham is a hugely famous face in China. While I don’t think the arrival of Haig Club will seduce the country’s rulers into suddenly reversing their policy (which aims to tackle the perception of officials living a life of luxury on the back of the State, as well as confronting bribery and graft), it could help reinvigorate Diageo’s whisky business worldwide, and make up for some of the recent slack in China.

Spicing up whisky

For his part, David Beckham highlights the heritage behind Haig Club as a key motivation for his getting involved, saying:

“The House of Haig has a rich history and I’m proud to be working at the heart of a home-grown brand which has built an incredible heritage over 400 years. Working closely with Diageo, we look forward to collaborating on Haig Club, valuing and treasuring the Haig traditions while reinventing this whisky for years to come.”

Simon Fuller also stressed the deal reflected a long-term commitment by all parties. The 53-year-old was well ahead of the trend with his music and television innovations over the past couple of decades, so Diageo must be hoping that his involvement with Haig Club can help reposition whisky for a younger demographic.

But aside from all this excitement, the great thing about an investment in Diageo is you're not just betting on this one brand of whisky - you're getting a veritable bar room of top drawer brands.

That's what makes the company such a brilliant long-term hold in my opinion, especially if you're interested in building a sustainable income from your share portfolio.

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Owain owns shares in Diageo.