Is Diageo too big?

Apparently some people think that Diageo is getting too big for it's own good.
Even after the Pernod buyout of Allied, Diageo is still more than twice as large as its nearest competitor.

Analysts have been calling for the spin-off of Guinness for several years, pointing to the Guinness empire as being outside of the core spirits business.

One of Diageo's institutional shareholders says "I can't see a break-up happening but it will be difficult for them to keep growing. They'll find partnerships and get into new territories, but it is difficult to see how they will keep growing."

While the U.S. is showing strong growth, the European market, where Diageo generates 70% of its sales, has been on a downslide.

Shares in Diageo, dipped 4% yesterday after the company warned of a steepening decline in European sales,which dipped 1% in its first half to December 31, were set to fall even faster in the second six months, though the business is beginning to benefit from operational efficiencies.

The firm also signalled a policy of higher price increases in the coming year, most imminently in North America, with sales of Smirnoff Ice falling in the US.

And with recent misteps like the Cardhu "Pure Malt" fiasco, which led to the departure of at least 2 execs, things are not as great as they could be for the largest purveyor of spirits.

Full Disclosure: I own a small number of shares in Diageo.