When Whiskey Advocate, a leading authority in the beverage industry, chose their Distiller of the Year, they went big, massive in fact.                                  

Diageo (DEO 1.38%) is the largest listed beverage company in the world with a market capitalization of $82 billion and revenue around $18.2 billion in 2012. It owns six of the 20 best-selling brands measured by retail sales. This includes Johnnie Walker, the top seller by value, and Smirnoff, the number one premium spirit brand measured by volume. And Diageo owns the top-selling stout in the world, Guinness.

The Whiskey Advocate praised Diageo for their "substantial investment," "world-beating vision for future growth," "guardianship of brand history to reach out to consumers," and "incredible portfolio of whiskies to suit all pockets and preferences" in naming them Whiskey Advocate's Distillery of the Year.

But then again choosing a huge company makes sense. Whiskey is getting big – all types, scotch grew 16% in the U.S. in 2012, while bourbon production was up 5.2% in 2012, and Irish whiskey shot up 22.5% the same year. 

What's driving the swelling demand?
It has to be more than the Draper Effect that's driving the sales of whiskey across the board, but you have to give the Mad Men's debonair whiskey drinker some of the credit. Who doesn't feel cool drinking an Old Fashioned while watching the show and the commercials, especially the ones by Christina Hendricks, a.k.a Joan. The buxom red head saunters across the room – while I'm drinking my Old Fashioned -- and tells me "It's classic. It's bold. It's Johnnie Walker, and I ordered it."

Yes, I did. And forget Draper and the rest of the show, I am off to the liquor store to buy some Johnnie Walker, which by the way is a Diageo brand.

Diageo's best-selling scotch blend is benefiting from an increase in Scotch demand across the globe. In the first six months of 2013, the value of exports grew 11%, about $3.27 billion according to the Scotch Whisky Association. Also, 563 million bottles were exported during the same time period, a 9% increase over the first six months of 2012. 

Increasing the worth of blends
Johnnie Walker was one of the reasons Whiskey Advocate awarded Diageo the annual award. Diageo brought the brand's Gold Label Reserve and Platinum Reserve to the U.S. and those along with some other of their other blends changed the perceived value of blended malts in a lot of consumers' minds. Diageo also plans to introduce new single malt brands to the market, including three new regular Talisker expressions.

Demand for premium brands is trending up and increases profit margins as well. 

Transporting Brands Across the Globe
Diageo is also moving its whiskeys all over the globe. Two of its newest concoctions, Crown Royal Maple and Bulleit Bourbon 10 year old have started strong. One of the reasons, Diageo did not pursue Beam (BEAM.DL) more aggresively is their confidence in their own whiskeys. It is already ranked first with 23% of the North American whiskey markets with its own brands, including Bulleit Bourbon, Crown Royal, George Dickel, and 7 Crown. Diageo is neck-in-neck with its major competitor Brown-Forman (BF.A 1.52%), which also has 23% of the market. If you compare the two head-to-head, or rather free cash flow to free cash flow, DEO comes out on top. It has a a positive FCF $280 million, or $0.11 per share, while Brown-Forman is negative at $621 million, for a negative per share of $2.89.

Analysts estimate that 43% of Diageo's revenues come from emerging and developing markets. Expect this growth to rise as Diageo fully utilizes United Spirits in India in 2014. United Spirits has 42% of the share of the market, and its closest competitor is Pernod Ricard at 12%. Diageo's only has a 1% share in the market, but plans to grow with United Spirits by focusing on its premium brands. Market demand in India is currently propelled by premiumisation, or selling of more exclusive and expensive brands with great profit margins. 

Primed for expansion
All the attributes cheered by the Whiskey Advocate, along with Diageo's market share, top-ranked brands, cash for expansion into emerging markets, and competitive advantage due to its scale also make great sense for investors who want to put their money in a company primed for growth and able to expand. The stock is not necessarily undervalued, but should bring consistent, quality growth over the long-term.