Diageo and BAT top picks for Citi as World Cup football approaches Proactive uses images sourced from Shutterstock
Diageo PLC (LSE:DGE and British American Tobacco PLC (LSE:BATS) are among Citi’s preferred consumer stocks heading into the summer, with the bank also expecting brewers and pub operators to benefit from improving trading conditions and this year’s FIFA World Cup, which starts in just over two weeks.
In spirits, Citi said Diageo could continue to recover after recently reaffirming its guidance for the 2026 financial year and accelerating strategic changes under chief executive Dave Lewis.
The analysts said investors would focus closely on Diageo’s strategy update in August, while rival Pernod Ricard remained under pressure because of concerns around leverage and dividend sustainability.
Citi also argued that the recent sharp sell-off in Campari shares looked excessive.
In tobacco, the bank said recent signals from the US Food and Drug Administration around enforcement of rules covering vape and oral nicotine products were supportive for the sector.
BAT and Philip Morris were named as Citi’s preferred tobacco stocks.
European beer stocks could also see further gains over the summer as improving trading conditions and the upcoming World Cup boost investor confidence in the sector, according to the analysts.
The tournament runs from 11 June until 19 July in Canada, Mexico and the US.
The bank said brewers had outperformed in recent weeks after first-quarter updates delivered no major negative surprises and, in some cases, exceeded expectations.
Citi said the sector was entering a potentially stronger period, helped by a favourable start to the second quarter and “building excitement” around this summer’s football tournament, which is expected to support beer consumption across key markets and provide a lift for pub operators.
The broker said beer remained “well-placed to see a further rerating and earnings momentum in the coming months”, with Carlsberg and AB InBev its preferred stocks in the sector, ahead of Heineken.
As well as their eponymous beers, Carlsberg’s UK brands include San Miguel and Tetley’s; AB InBev owns Stella Artois and Corona; while Heineken brews Birra Moretti and Foster’s.