Diageo plc (ADR) (DEO), BEAM Inc (BEAM): What the “Missouri Liquor Wars” Mean for Investors

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Both sides claimed victory. Major Brands pointed out that the ruling affirmed that it was in the legal right, and CEO Sue McCollum expects to receive significant damages. The real winner, however, was probably Diageo plc (ADR) (NYSE:DEO), which gained the right to transfer its business to Major Brands’ rival Glazer’s Distributors and will probably attempt to use this ruling as a tool to chip away at similar laws in other states. The long-term benefits of consolidating the company’s wholesalers should easily overcome the cost of damages in this case: The $550 million Major Brands brings in as annual revenue is just over 1% of the $44 billion in net income that Diageo recognized last quarter. Smaller distillers, like bourbon whiskey purveyor BEAM Inc (NYSE:BEAM), may enjoy the benefits of Diageo’s actions without paying a dime.

This will provide another approach for boosting earnings at the top liquor companies as they become free to cut costs and more tightly focus their promotional efforts in the world’s biggest liquor market. That’s good news for investors, who have come to appreciate the solid competitive moats and predictable dividends of the big liquor distributors.

The article What the “Missouri Liquor Wars” Mean for Investors originally appeared on Fool.com.

Fool contributor Daniel Ferry owns shares of Diageo. The Motley Fool recommends Beam and Diageo.

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