Having fallen practically 30% in 2025 thus far, drinks large Diageo‘s (LSE: DGE) share price now sits around 1,820p. To put this in perspective, the stock hasn’t been this low in roughly 9 years.

The phrase ‘crisis’ is arguably used far too usually lately. Even so, I think about such motion hasn’t been straightforward for holders of the inventory. In truth, I’m now starting to marvel, not when the FTSE 100 juggernaut will get its mojo again, however whether or not its greatest days at the moment are behind it.

Right here’s what’s bought me anxious

Diageo faces a couple of important challenges.

The primary of those is one that almost all of us will most likely establish with, specifically the excessive value of dwelling. When simply paying for requirements has turn out to be a problem, individuals will naturally look to chop corners the place they’ll. In the event that they drink, it’s lower than earlier than. They could drink extra at residence earlier than going out. They could even be transferring to cheaper manufacturers.

The second main problem for the corporate is one thing few traders would have foreseen a decade or so in the past. Blame the relentless rise of smartphones and social media however youthful individuals, notably these from Technology Z, don’t appear all that bothered by booze. That’s even when they do have money to flash.

This cultural shift has been compounded by the recognition of weight reduction medication. Whereas its long-term unintended effects stay unknown, early indications recommend Ozempic can boring the will to devour alcohol in some individuals.

Any positives?

As grim as this sounds for Diageo, it’s value dwelling on the silver lining to this explicit cloud.

The inventory is buying and selling on a valuation not seen for…effectively, I don’t truly bear in mind. A price-to-earnings (P/E) ratio of rather less than 15 for the agency’s subsequent monetary yr (starting 1 July) is considerably beneath the agency’s five-year common P/E of 23. One might speculate that this constitutes a enough margin of security for any value-focused investor trying to benefit from others’ worry.

These trying to find earnings from their portfolios may additionally be tempted by the 4.1% dividend yield. Positive, there are higher-paying shares on the market. However few boast nearly as good a observe document as Diageo. Because of its bumper portfolio of manufacturers, it has persistently distributed (and raised) the amount of money returned to traders, even when the latter is rarely assured.

Present me the cash!

As a long-term admirer, I needs to be chomping on the bit to lastly load up on Diageo inventory. However I’m not. Not less than, not but.

Overlook the influence of Donald Trump’s tariff tantrum and the following removing of the corporate’s mid-term steerage. For my part, these are nowhere close to as vital because the foggy long-term outlook pushed by these points recognized above.

As a Idiot who buys inventory with the intention of holding for years and a long time, I want proof that volumes are recovering. I then need to see gross sales truly rising at a good clip in key markets corresponding to North America, Europe, and Latin America. With out this, we might have a state of affairs the place the alcoholic beverage trade follows the identical trajectory because the slow-dying tobacco area.

That ought to maintain the dividend stream going for years. However it gained’t give me the share price momentum I’m in search of.