From an investor’s perspective, I believe that a beverage producer has many advantages Diageo (LSE:DGE). Diageo’s share price has fallen significantly over the past five years. This made the share price attractive enough for me to add it to my portfolio a few months ago.

With today’s (September 26) deal announcement, one of my feelings about the stock has gained some airy.

Full steam ahead?

The investment case for Diageo is quite plain.

Globally, the alcoholic beverages market is significant and is likely to remain so. Diageo is well-positioned to capitalize on this with its collection of premium brands including Johnnie Walker AND Smirnoff. That gives it pricing power, which in turn helps it generate significant profits. It’s no coincidence that the company is a dividend aristocrat, increasing its shareholder payout every year for more than three decades.

But fears are growing in the City about a potential slowdown in a delicate global economy. Weakening results in Latin America have dragged down Diageo’s share price, raising questions about whether other markets could see weaker results.

In a statement today, the company assured the market that “Our expectations have not changed since we reported our preliminary results on 30 July 2024. The global environment remains challenging for both our industry and Diageo”.

Calming – to some extent

At first glance it sounds pretty good.

Expectations remain the same and the situation in the company is not getting worse.

On closer inspection, this is only mildly reassuring to me. After all, the company is confirming the expectations it set less than two months ago. For a company of Diageo’s sophistication, I would be disappointed if its latest earnings expectations fell low of that recent forecast.

On top of all this, even though the company claims that “good progress“On strategic initiatives, such as improving how we distribute our products in the key US market, the fact that Diageo has highlighted that the environment remains challenging strikes me as a note of caution. This could set the stage for bigger issues down the road.

I’m looking for value

I liked the business for years, but not the share price. The hard business environment has caused Diageo’s share price to fall this year to the point where I feel it offers value.

On the one hand, holding up market expectations could be a reason for the stock to start rising. Indeed, as I write this on Thursday morning, Diageo is up 5% in early trading.

On the other hand, the fundamental challenges feel like they never go away.

This could mean that the stock will continue to fall over time. As a long-term investor, I still see real value in the investment and believe that the current Diageo share price is reasonable. I plan to hold.