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I'll Drink to That: Why Diageo Is Buying in India

Matt Twomey
Sunday, 11 Nov 2012 | 1:15 PM ET

Diageo spent more than $2 billion to buy a majority stake in India's United Spirits. That's a lot of cash but CEO Paul Walsh said it's all about "fabulous demographics."

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"If you look at the emerging middle class, by 2025, it will move from 100 million or so today to 600 million people. So it's a very attractive market," he told CNBC's "Squawk on the Street" on Friday.

"We've just got the No. 1 player in that market," he said.

The chief of the world's largest spirits group also cited India's youthful population and good prospects for gross domestic product growth, saying that, for spirits, the market is even more attractive than China.

(Read More: Diageo to Buy Stake in India's United Spirits for $2 Billion)

Diageo's $2.1 Billion Bet on India
Paul Walsh, CEO of Diageo, discusses his company's agreement to acquire 53.4 percent of India's United Spirits. "India is a very attractive market, and we just got the number one player in that market," he says.

In Europe, Walsh admitted there are difficulties, particularly in the South, which is under heavy economic pressure. But, he said, there are also opportunities. "We're seeing very good growth in Germany. We're seeing good growth in the Nordics. The U.K. is OK. And then have you markets such as Turkey, which for us is a very exciting market."

He said the key was to offset declines in Southern Europe with opportunities elsewhere.

This focus on the Asia-Pacific region by adult beverage makers is nothing new. Heineken won control of Tiger beer's maker in a $6.46 billion deal in September. Before that, SABMiller's bought Foster's last December for $11.98 billion.

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