Diageo CEO pleased with portfolio in spirits and beer

By Anjali Athavaley

NEW YORK, Nov 11 (Reuters) - Diageo Plc (LSE: DGE.L - news) is content with its portfolio following recent changes such as the sale of most of its wine business to Australia's Treasury Wine Estates and its brand swap for full control of Don Julio tequila, the company's chief executive officer said on Wednesday.

"We've done the major active management of the portfolio that we wanted," said Chief Executive Ivan Menezes, speaking to reporters after the company's investor conference in New York. "I'm pleased with where we are now with the portfolio that we have in spirits and beer."

His comments came the day that Anheuser-Busch InBev the world's biggest brewer, launched a $100 billion-plus offer for nearest rival SABMiller PLC (Xetra: BRW1.DE - news) . The merger would combine AB InBev's Budweiser, Stella Artois and Corona brands with SABMiller's Peroni, Grolsch and Pilsner Urquell and brew almost a third of the world's beer, dwarfing rivals Heineken (Swiss: HEI.SW - news) and Carlsberg (Other OTC: CABGY - news) .

Some analysts have speculated that Diageo could divest its beer business and say the deal puts greater pressure on the company to compete.

"The proposed ... deal will create a competitor in alcohol with a market capitalization about four times the size of Diageo," Ian Shackleton, an analyst at Nomura, said in an earlier research note. "We expect this to increase pressure to maximize performance."

Diageo generates one-fifth of its revenue from beer, mostly the Guinness brand, which is growing more slowly than spirits. Despite the weak performance, Diageo often says the business is critical, since it gives it a route to market in Africa, making it easier to sell its spirits such as Johnnie Walker whisky.

Menezes said AB InBev's tie-up with SABMiller would not significantly alter the competitive landscape for Diageo in Africa.

"Beer is a very local business, and so the scale of SAB ABI doesn't really change in Africa substantially," he said. But "there is no doubt they will be a formidable competitor, and we absolutely intend to hold our own."

On the possibility of any assets that the combined entity may divest, he said: "If assets come available in Africa, we would be interested."

(Reporting by Anjali Athavaley; Editing by Leslie Adler)