Up 10% in days, what on earth's going on with the Diageo share price?

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The Diageo (LSE: DGE) share price is up 10% in just over a week. Given its awful recent performance, that almost feels like an Nvidia-type surge!

Seriously though, it’s been a pleasant surprise as a Diageo shareholder to see it rising like a well-poured Guinness. As I write today (12 December), the stock’s actually leading the FTSE 100, with a 3% gain.

Zooming out however, these gains barely even register on a share price chart — a mere flick upwards on a rollercoaster that’s been hurtling downwards for three years.

The stock’s still down 36% since late 2021.

But why has the share price suddenly sprung into action? Let’s take a closer look.

Brokers are turning cautiously positive

Diageo shareholders owe the analysts at Jefferies and UBS a pint for the recent rise. They’ve upgraded their ratings on the stock to Buy.

On 5 December, Jefferies wrote that 2025 may be a “trough year” for the spirits giant, with 2026 marking a recovery. It said: “We think that Diageo will start to look different as confidence in spirits growth increases and under a new, heavyweight CFO, where we see a renewed focus on growth, profit and cash.”

Today we had news that UBS has improved its rating from Sell to Buy, saying that Diageo brands Don Julio (tequila) and Crown Royal (whisky) were outperforming a weak US spirits market.

The Swiss bank raised its price target to 2,920p from 2,300p. If it reached that, which is far from guaranteed, then we’d be looking at a 14% gain from today’s price of 2,551p.

That would actually put my holding back in the black on a cost price basis.

Splitting the G

Speaking of black, Guinness continues its remarkable reinvention. The legendary Irish stout has become so popular that UK pubs are constantly running out and Diageo is struggling to keep up with demand.

This is partly down to all those online influencers ‘splitting the G’. This is the trend where young drinkers take a big first swig of Guinness and aim to reach halfway down the letter ‘G’ on the pint glass.

Diageo is also tapping into the alcohol-free drinks trend, with Guinness 0.0 now accounting for nearly 3% of total Guinness volume worldwide.

A sticky situation

The outlook’s a bit murkier for tequila though. Donald Trump has announced a plan for 25% tariffs on all Mexican imports to the US. Diageo owns tequila brands Casamigos, Don Julio, DeLeon, and 21 Seeds.

Unlike Guinness, which is associated with Ireland but doesn’t have to be brewed there, premium tequila can’t so easily avoid the proposed tariffs. It must be distilled from the blue agave plant in Mexico.

Back in November, those analysts at Jefferies estimated that prices would have to rise 10% to offset the impact of a 25% import tariff. The risk is that US drinkers might not swallow such a hike, thereby squeezing sales and profits.

Of course, we don’t know what tariffs (if any) there’ll be, or whether tequila importers will be exempt.