Berkshire Hathaway Inc (NYSE: BRK.B) – the multinational conglomerate of legendary investor Warren Buffett – is famously US-centric, with households names like Apple, Coca-Cola, and Bank of America dominating its holdings.
But nestled among the 36 stocks in its $300 billion portfolio is a lone British name: Diageo Plc (LSE: DGE). The drinks giant owns iconic brands like Guinness, Johnnie Walker, and Smirnoff.
Despite its global footprint, Diageo shares have had a rough ride in 2025, falling nearly 50% from their peak.
Yet Buffett’s modest $23 million stake suggests he sees long-term value.
So, what makes Diageo stock so special that it’s the sole FTSE 100 pick for the Oracle of Omaha?
Diageo stock can weather younger generations drinking less
Diageo shares sure face headwinds from shifting consumer behaviour.
Younger generations are drinking less, socialising differently, and increasingly turning to health-conscious lifestyles.
Add to that the rise of appetite-suppressing weight-loss drugs like Ozempic, and the outlook for alcohol consumption looks cloudy.
Yet, DGE stock valuation has adjusted sharply. It now trades at just 15 times earnings – nearly half its multiple versus a few years ago.
For long-term investors, this represents an opportunity to buy a quality name at a steep discount.
While the market may be shrinking, Diageo Plc has global reach and pricing power, which could help it weather the storm better than most.
What’s so special about DGE shares?
Warren Buffett is known for favouring companies with durable competitive advantages – or what he refers to as “economic moats”, and DGE shares fit the bill.
Its portfolio of globally recognised brands gives it pricing power and customer loyalty that’s hard to replicate.
Whether it’s a pint of Guinness in Dublin or a bottle of Johnnie Walker in Tokyo, Diageo’s products command premium shelf space and consumer trust.
This brand equity acts as a defensive barrier against competitors, allowing the company to maintain margins even in challenging macroeconomic environments.
For Buffett, this moat is invaluable. It’s likely why Diageo stock earned a spot in his multi-billion-dollar portfolio, despite its small size relative to other holdings.
Diageo shares: a Buffett-endorsed bargain
While small ($23 million), Diageo shares inclusion in Berkshire Hathaway’s portfolio, nonetheless, is a meaningful vote of confidence.
The FTSE 100 stock offers both brand strength and global presence.
At current valuations, DGE stock offers a compelling entry point for those who believe in its long-term resilience.
But caution is warranted. Buffett may be holding, but he’s not betting big. For everyday investors, Diageo could be a smart contrarian play – just not one to go all-in on.
That said, Wall Street currently has a consensus “overweight” rating on Diageo Plc, and its rather lucrative dividend yield of 3.59% makes it all the more attractive as a long-term holding.
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