Diageo PLC, a global alcoholic beverage company headquartered in London, England, stated that it will buy the Turkish spirits company Mey Içki Sanayi ve Ticaret AS for $2.1 billion. For the past six years, foreign liquor companies have been in disputes with Turkey because liquor importers have been asked to pay more customs tax on their imports. This dispute is finally approaching a resolution, and it seems to have helped convince Diageo to go ahead with the deal. Buying Mey will help Diageo expand its influence in the Turkish market, mainly because Mey has access to over 50,000 retail stores in the country and an 80% share of the Turkish market for raki, the national Turkish drink. Diageo hasn't made a major acquisition in about 10 years, but lately they have been showing an interest in expanding in developing markets, such as the ones in China and Vietnam. I feel this is a very wise and strategic move for Diageo because they will not only be expanding their company, but they will also be acquiring a strong presence in a country that has a growing market with a strong GDP. I also like the fact that they are focusing on making investments in markets with a fast-growing middle class because I feel that this is where they sell most of their product and can make the biggest profit.
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Expanding a company is very promising and is a very good move. Diageo will benefit from this deal.
ReplyDeleteBY KATERINA ARGYROS