What You Need to Know
Diageo is the world's largest spirits, wine, and beer producer, keeping the liquor cabinets of tipplers across the world stocked with Smirnoff, Bailey's, and Johnnie Walker. Based in London and traded on both the L.S.E. and N.Y.S.E., Diageo has a presence in 180 other countries and generates $14 billion in global annual revenue.

Where They Came From
Despite its stranglehold on the industry, Diageo is actually quite new. Formed in 1997 by a $37 billion merger between Guinness and food and spirits producer Grand Metropolitan, Diageo—at the time the world’s seventh-largest food and beverage company—was forced by the Federal Trade Commission to sell off its Dewar’s Scotch, Bombay gin, and Bombay Sapphire brands. (Bacardi pounced on all three.)

Since then, the company has slashed its food brands, marquee though they were, and positioned itself squarely in the middle of—or more accurately, at the top of—the liquor business. Paul Walsh, who took over as C.E.O. from John McGrath in 2000, and Chairman Lord Blyth of Rowington, former Boots chairman, sold Pillsbury to General Mills in a $10.5 billion stock deal in 2001, and Burger King to Texas Pacific Group for $1.5 billion in 2002.

Flush with cash from the sell-offs, Diageo went on a shopping spree. Under a $5.3 billion partnership with Pernod Ricard, Diageo bought Seagram from Vivendi Universal in 2001. Between 2002 and 2005, Diageo's sales increased 25 percent.

Where They Are Now
Diageo’s operating profit reached $4 billion on sales of $19 billion from June 2005 to June 2006. The company remains tightly focused on the roster of key names that allows it to pull in those returns, allotting much of its reported $4 billion marketing budget to eight "global priority" brands: Smirnoff, Johnnie Walker, Guinness, J&B, Bailey's, Jose Cuervo, Tanqueray, and Captain Morgan, sales of which together supply more than 65 percent of Diageo’s profits. That investment has resulted in massive ad campaigns, such as the Johnnie Walker "Keep Walking" ads, launched globally in 1999. These campaigns have been incessant but effective: Increased North American demand for Diageo brands helped lead to an overall 9 percent increase in sales and a 43 percent increase in net income in 2006.

What's Next
In 2005, Diageo acquired the Chalone Wine Group, a California-based collection of wineries: Since then, it has declined at least one major wine acquisition, a Montana wine business, but Walsh has promised to add “selectively” to Diageo's wine holdings, with a focus on the premium segment.

Just as important for the global company, Diageo is pouring resources into such emerging markets as Russia, Brazil, India, and China. The company is mining local customs to create ad campaigns that speak specifically to particular cultures, especially in China, one of the world’s fastest-growing whiskey markets. Foreign acquisitions are also on tap: Diageo is planning to acquire a 43 percent stake in the Sichuan Chengdu Quanxing Group, a Chinese holding company with investments in Baijiu, a high-end Chinese liquor. —Sophia Banay