Fundsmith dumps Diageo over weight-loss drugs
British fund manager Terry Smith is dumping its Diageo stock as it faces several headwinds, including increasingly popular weight-loss drugs.
Smith’s Fundsmith, which has owned Diageo shares since it was founded in the late ’90s, said in its annual shareholder letter that the London-listed booze company’s new management, led by CEO Debra Crew since June 2023, has had problems. The fund also said Diageo has not been straightforward about its business in Latin America, where its sales have sunk.
“Moreover, we suspect the entire drinks sector is in the early stages of being impacted negatively by weight loss drugs,” the letter said. “Indeed, it seems likely that the drugs will eventually be used to treat alcoholism such is their effect on consumption.”
Early studies have shown that GLP-1 weight-loss medications, like Novo Nordisk’s Ozempic and Eli Lilly Zepbound, also curb users’ appetite for alcohol. This comes as broader trends point toward consumers drinking less.
