LONDON -- While crippling austerity in Europe and fiscal obstacles could put the brake on growth rates there, in developing regions a backdrop of accommodative central bank action, elevated commodity prices, and rising personal affluence levels have created an environment of exceptional commercial opportunity.

The divergence between the growth prospects of traditional and developing markets is borne out by latest International Monetary Fund's (IMF) growth projections, which expects developing nations and emerging markets to expand 5.3% and 5.7% in 2013 and 2014, respectively. By comparison, it anticipates that the U.S. economy will rise 1.9% this year and 3% in 2014, while eurozone GDP is forecast to dip 0.3% in 2013 before rebounding just 1.1% next year.

Bubbly activity in these developing geographies can create large opportunities for many London-listed firms. Today, I am looking at Diageo (LSE:DGE) (NYSE:DEO) and assessing whether its operations in these regions are likely to underpin solid earnings growth.

Developing market sales continue to grow
Diageo announced earlier this month that organic net sales rose 5% in the nine months to the end of March, with volumes increasing 1% over the period. The firm, whose portfolio of premium drinks brands includes megabrands Guinness, Smirnoff, Johnnie Walker, and Baileys, holds excellent pricing power, which can allow it to raise turnover even in times of volume pressure.

Organic growth in Latin America and the Caribbean came in at 14% in June-March, while sales in Africa, Eastern Europe, and Turkey rose 9% and growth in the Asia-Pacific clocked in at 4%. In its traditional markets, meanwhile, North American organic growth came in at a respectable 6% for June-March, although sales in Western Europe dipped 4%.

Although emerging market growth moderated from earlier months in December-March, the third quarter is a small quarter for the firm and it was beset by technical issues such as shipment phasing in Columbia and Venezuela. It also advised of solid spirits growth in Africa and market share gains in Asia-Pacific during the period, tempering fears that it was running out of steam in developing markets.

Diageo remains locked in battle in its bid to acquire a 53.4% stake in India's United Spirits, boosting its holding from 27.4% at the present time. However, the deal is tipped by many to fail as the Indian distillers' price has shot higher since Diageo purchased its initial stake in November and announced plans to launch a mandatory offer for the remaining 26%. Diageo has failed to increase its offer, which expires today.

However, Diageo still has effective control of the firm -- its stake enabling it to appoint the chief executive and chief financial officers and influence board appointments -- and still gives it a chunky holding in what is a massive player in the Indian spirits market.

The company has also ramped up M&A activity in other regions in recent years, including the purchase of Ethiopia's Meta Abo brewery in 2012, as well as increasing its stake in Vietnam's Halico spirits firm to just under half. And its purchase of Turkey's Mey İçki the previous year is now fully integrated, significantly boosting sales in Africa, Turkey, and Eastern Europe. I fully expect acquisitions to keep on rolling well into the future.

So is Diageo a buy?
City analysts expect earnings per share to rise 9% to 103 pence in the year ending June 2013, before marching 12% higher the during the following 12 months to 115 pence. The drinks giant was recently dealing on a P/E rating of 19 and 17 for 2013 and 2014, correspondingly, representing a discount to a prospective earnings multiple of 17.6 for the whole beverages sector.

And I believe that an appealing dividend policy, combined with its consistent delivery of earnings expansion, seals the investment case for Diageo.

The firm hiked last year's full-year payment almost 8% to 43.5 pence in 2012, and brokers expect this to increase to 47 pence and 52 pence in 2013 and 2014. These dividends carry yields of 2.4% and 2.6%, below the average FTSE 100 yield of 3.3%, although the firm's record of lifting dividends should lift it close to the benchmark in coming years.

The canny guide for clever investors
If you already hold shares in Diageo, check out this newly updated special report that highlights a host of other FTSE winners identified by ace fund manager Neil Woodford.

Woodford -- head of U.K. Equities at Invesco Perpetual -- has more than 30 years' experience in the industry, and boasts an exceptional track record when it comes to selecting stock market stars. The report, compiled by The Motley Fool's crack team of analysts, is totally free and comes with no further obligation. Click here now to download your copy.

Fool contributor Royston Wild has no position in any stocks mentioned. The Motley Fool recommends Diageo (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.