From an investing perspective, I think there is a lot to like about drinks maker Diageo (LSE: DGE). The past five years have seen the Diageo share price fall significantly. That made it attractively enough priced for me to add it to my portfolio a few months ago.

With a trading announcement today (26 September), one of the concerns that I feel has been dogging the stock has had some more light cast on it.

Full steam ahead?

The investment case for Diageo is fairly straightforward.

Globally, the market for alcoholic drinks is substantial and likely to remain that way. Diageo is well-positioned to benefit from that, thanks to its collection of premium brands such as Johnnie Walker and Smirnoff. That gives it pricing power and in turn helps it earn substantial profits. It is no coincidence that the company is a Dividend Aristocrat, having grown its shareholder payout annually for over three decades.

However, fears have been growing in the City about a potential slowdown for the business in a weak global economy. Weakening performance in Latin America has helped send the Diageo share price downwards. That raised the question of whether other markets could also be in line for softer performance.

In today’s statement, the company reassured the market that, “Our expectations are unchanged from when we reported our… preliminary results on 30 July 2024. The global environment remains challenging for both our industry and Diageo”.

Reassuring – up to a point

At surface level, that sounds pretty good.

Expectations remain the same and things have not been getting worse for the business.

On closer examination, though, it is only mildly reassuring for me. After all, the company is affirming expectations it laid out less than two months ago. For a business of Diageo’s sophistication, I would be disappointed if its latest financial expectations were not still in line with such a recent forecast.

Added to that, although the business said it has been making “good progress” on strategic initiatives such as improving how it distributes its products in the key US market, the fact that Diageo underlined that the environment remains challenging strikes a note of caution for me. That could set the scene for more troubles further down the line.

Looking for value

For years I liked the business but not the share price. Challenging conditions for the business pushed the Diageo share price down this year to a point where I felt it offered value.

On one hand, maintaining the market’s expectations could provide a reason for the share to turn upwards from here. Indeed, as I write this on Thursday morning, Diageo has moved up 5% in early trading.

On the other, the underlying challenges sound as if they have not gone away.

That could mean the shares continue to move lower over time. As a long-term investor, I continue to see real value in the investment case and think the current Diageo share price is reasonable. I plan to hold.