Unbelievable, Diageo (LSE:DGE) share price performance has hit levels last seen 14 years ago in the spring of 2012. It’s been a wild ride since shares peaked at around 4,036p in December 2021, when Covid lockdowns forced us all to experiment with cocktails at home. Today, FTSE100 drinks huge deals at just 1,594p. What went wrong?

After the pandemic, inflation rose and drinkers tightened their belts. Diageo shares began to fall, with the situation coming to a head on November 10, 2023. Management shocked markets by lowering forecasts after sales in Latin America and the Caribbean fell by 20%. The region generated approximately 11% of the group’s revenues.

Why do FTSE 100 shares keep falling?

Drinkers switched to cheaper local brands, and distributors struggled with excess stocks. The weakness soon spread to the United States, Europe and China. Tariffs imposed by Donald Trump made the situation worse, hitting exports of Mexican tequila and Canadian whiskey to the US. Concerned investors have begun to worry about the impact of Gen Z sobriety and GLP-1 weight loss drugs.

AND averaged repeatedly, but the stock only continued to fall. A quick look at full-year net profits shows why.

• 2025 – $2.54 billion
• 2024 – $3.87 billion
• 2023 – $4.45bn
• 2022 – $4.33 billion
• 2021 – $3.95 billion

Currently, Diageo shares are down 53% in five years and 20% in 12 months. However, recently the mood has changed. Within a month, the company’s shares increased by almost 12%. Have we finally reached the bottom of the glass?

I would like to say that this was followed by a stunning set of numbers. Unfortunately, this did not happen. Sales in the third quarter (May 6) increased just 0.3% to $4.5 billion. This result exceeded expectations, but only slightly and mainly due to two one-off increases. Easter came earlier this year and distributors stocked up before the FIFA World Cup. New chief executive Sir Dave Lewis refused to change his full-year forecasts.

The United States remains a huge problem, accounting for about 40% of net sales. Higher oil prices won’t facilitate either. They oppress consumers and at the same time raise transport costs.

So why did the mood improve? Trump lifted US tariffs on Scotch whisky. Investors saw signs of stabilization in Africa and Latin America. Deutsche Bank upgraded the stock to Buy, arguing that excessive market pessimism had already been priced in.

Is it worth reconsidering Diageo?

I have noticed that consumer shares are generally rising as markets remain hopeful for some resolution to the Iran crisis. Personally, I don’t count on any in the near future. However, I have no plans to sell my Diageo shares. Consumer trends are cyclical in nature. At some point they will fall over again.

This latest rally could easily end in failure. However, with Lewis running the show and the price-to-earnings ratio still at a modest 13.2, I still think a recovery will eventually come. I think Diageo stock looks worth considering today, but I wouldn’t expect it to see a huge upside. The road to recovery will likely be a bumpy one, but I feel like it’s getting closer.

Is it worth investing £5,000 in Diageo Plc now?

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Harvey Jones owns shares in Diageo.