Diageo shares fall after SEC probe adds to its woes

Shares in Diageo — owner of Guinness and Smirnoff vodka — fell yesterday after it said the Securities and Exchange Commission is looking into its distribution practices in the US, adding to its woes as frustrated investors question the performance of the distiller’s chief executive officer.

On Thursday, Diageo had said it was working with the SEC to provide information on its distribution methods, after the Wall Street Journal said the regulator is checking whether the company shipped excess inventory to boost results. The shares fell as much as 2.1% in London trading.

Two years after taking the helm with a view that selling drinks is a simple business, CEO Ivan Menezes is grappling with stagnating sales, troubled acquisitions in China and India, and a share price that has lagged the European Food & Beverage sector by over 30 percentage points over his tenure.