Diageo reports sales dip but UK market growth
Diageo blamed volatile exchange rates, a “lack of overarching recovery in the US and Western Europe” and troubles in emerging markets after reporting lower-than-expected sales figures in its half-year results.
Organic sales, excluding new acquisitions and disposals, were down 0.1% year-on-year to £5.9 billion, slightly less than analysts had predicted, in the six months to December.
But while sales dipped 1.5% in the first quarter, they rose 0.7% in the second, offering shareholders cause for optimism.
Diageo Great Britain said it saw new sales growth of 2% in the six months, driven by a 50% growth in sales from its reserve portfolio, which includes the likes of Haig Club and Cîroc.
Country director Andrew Cowan said: “Captain Morgan performed well, with net sales up 6%. Sales of Baileys also grew by 2% as the brand continued to drive excitement behind Baileys Chocolat Luxe.
“Johnnie Walker grew net sales by 8% due to the performance of Black Label and Blue Label.
“Smirnoff net sales were flat, lapping the launch of Smirnoff Gold last year. Smirnoff Red saw good performance, up 3% on net sales. The brand benefitted from a complete re-launch as part of its 150 year anniversary, including new advertising which launched in September, and a ground breaking partnership with Spotify, the world’s leading music streaming service.
“The resurgence of the gin category in Britain brought in a strong performance by Tanquerary, which saw double digit growth, and by Gordon’s which was helped by the launch of the new Gordon the Boar television commercial.
“Investment behind Guinness continued, with the launch of Guinness Dublin porter and Guinness West Indies porter within the Brewers Project initiative, and a series of ads featuring rugby heroes from the four home nations, however, in a continued challenging and declining marketplace, net sales in beer were down 2%. However, it maintained share.”