Diageo is having a good crisis. Excluding one-off pressures in Global Travel Retail and keg sales to the on-trade, organic sales growth would have accelerated to 6% in H1, roughly in-line with pre-crisis growth rates. This demonstrates how Diageo has been able to pivot to the off-trade channels and deliver market share gains in key markets, including the US and Europe. Overall, Diageo held or gained share in 70% of its sales in measured markets. Some brands that did particularly well over H1 were Bulleit (organic sales +15%), Crown Royal (+3%), Baileys (+10%), Captain Morgan (+7%), Don Julio (+39%) and Casamigos (+135%). The company has been helped by its high exposure to the US market (36% of sales/45% of EBIT), where consumer demand has been resilient across a wide swathe of categories during the crisis – but especially so for Spirits. Management expects the strong US growth to continue (consumer off-take of Diageo’s brands in H1 was in the mid-teens), but there is clearly a risk that momentum eases somewhat, if for no other reason than the comps become more difficult from the second half of calendar 2021. Management has flagged increasing A&P intensity going forward, after it cut spend during last year. The on-trade recovery is likely to be slow, given capacity restrictions, so margins may not return to prior levels in the near term. Quality should be rewarded. Better organic sales growth in H1 and a positive tone from management about the longevity of this trend leads us to expand our target multiple on the stock. Even so, we cannot get to the current share price, and our DCF still shows considerable downside – even tweaking up the terminal growth rate to unrealistically high levels. We maintain our Sell recommendation on valuation, whilst acknowledging the strong performance.