Guinness growth boosts Diageo but Irish sales flat
Drinks company Diageo which owns Guinness, Smirnoff and Baileys has said sales in the first half of its financial year in Ireland were flat but that its overall performance globally produced better-than-expected results, writes
Shares in the world’s largest spirits maker were largely unchanged as it said sales of Guinness rose 4% globally in the six months to the end of December.
It said Guinness sales rose 1% in Ireland, driven by lager brand Hop House 13, but that sales of other beer brands declined 3%. Net sales of spirits were up 13% in Ireland, largely driven by strong performances by Gordon’s and Tanqueray in gin.
A Diageo Ireland spokeswoman said: “We have seen tremendous success with Hop House 13 in Ireland and Britain. Its strong growth and share gains in the lager beer category continued in the first half. Hop House is now about 10% of our Guinness business in Britain.”
Net sales in the UK rose 7% through growth in gin and beer. On the continent, net sales were up 3% overall but French sales were flat.
Diageo, worth £64bn (€73bn), said that foreign exchange rates would take a bigger-than-expected gulp out of sales and profits in the full year, due to a strengthening sterling and weak dollar.
The company said marketing spend rose 7% in the period, as it works to improve performance of Scotch, its key product, and vodka in the US, which has been weak.
However, Diageo and rivals like Pernod Ricard and Brown-Forman have benefited from the current popularity of cocktails, as spirits gain market share from beer.
Like many global packaged goods companies, Diageo has adopted a plan of costcutting that has helped make its business more efficient, providing funds to use for generating sales.
Diageo’s operating profit rose 6% to £2.2bn in the six months. It had previously warned that sales and profit growth for the current financial year, ending in June, would be driven by the second half, due to a later Chinese New Year and new restrictions on selling alcohol in India.
- Additional reporting Reuters
