Diageo delivers 30 months of continuous growth

Claire Dodd

Claire Dodd

28 January 2016

Diageo GB saw sales rise 3% in the in the six months to 31 December, marking thirty months of continuous growth, it revealed today during its interim results.

Andrew Cowan, country director for Diageo Great Britain, said the growth was down to its continued focus on four key strategic areas: maintaining the momentum behind Guinness, growing the Reserve business, excellent execution of the premium core portfolio, and developing strong innovation.

Beer net sales were up 3%, with Guinness net sales up 4% driven by strong Rugby World Cup activation. Guinness Golden Ale launch was the most successful innovation launch in the premium bottled ale category in the last 26 weeks, delivering £1.34m in retail sales.

Meanwhile Reserve brands net sales were up 31%, driven by Cîroc, scotch malts and Tanqueray No. Ten. Cowan said that Cîroc has increased its on-trade visibility by 75% versus the previous year. Meanwhile, net sales for Tanqueray No. Ten were up 74%. Total malt sales grew by 40%, driven by the launches of Talisker Skye, Talisker Storm, Dalwhinnie Winter's Gold and Singleton Spey Cascade.

Christmas proved a good time for the Baileys brand as sales increased by 14%. Captain Morgan net sales were up 2%, with growth driven by the launch of Captain Morgan White. Growth for Smirnoff Vodka was more modest, with volumes up by just 1%.

Globally Diageo delivered 2.4% profit growth and 1.8% net sales growth. Chief executive Ivan Menezes said the results showed the drinks giant had proved it was now a 'stronger and more competitive business'. Organic volume growth stood at 1%, while the company also delivered a dividend up 5% to 22.6p per share.

Adverse exchange rates and the impact of the disposal of non-core assets, reduced net sales by £400m and operating profit (before exceptional items) by £156m million to £5,606m and £1,717m, respectively.

Menezes, said: 'We have delivered volume growth, a stronger top line, improved the performance of our key brands, driven cost productivity and continued to generate strong cash flow. While trading conditions remain challenging in some markets, Diageo’s brands, capabilities in marketing and innovation and our route to consumer have proved resilient. I am confident that Diageo can deliver improved, sustained performance.'

Diageo completed the sale of UK-based Percy Fox and US-based Chateau & Estate Wines to Australia’s Treasury Wine Estates in early January. The deal was worth £361m.

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