Johnnie Walker owner Diageo toasts jump in sales as bars reopen
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Trade was particularly strong in Britain, with overall sales up 19 per cent, including a 13 per cent rise in spirits and a more than 30 per cent jump in Guinness sales in the six months to the end of the year, compared with the same period in 2020.
Within spirits, vodka was particularly impressive, with sales up 21 per cent driven by Smirnoff. Baileys and rum also grew but sales of gin declined.
Despite the solid growth, the group, which is Scotland’s biggest whisky producer by volume and also owns Bell’s, revealed that it is feeling the pinch from growing inflationary pressures, with costs rising and supply chains remaining strained.
Beer sales across the continent were up 44 per cent, with Diageo highlighting strong sales of Guinness in Great Britain and Ireland.
Tequila was the fastest-growing drink for the business, with sales up 56 per cent as its Don Julio and Casamigos brands enjoyed rising popularity
There was a 27 per cent jump in whisky sales, including a 31 per cent rise for premium brand Johnnie Walker, which recently opened a new attraction on Edinburgh’s Princes Street.
The FTSE-100 group reported half-year net sales of £8 billion, up 15.8 per cent. Operating profits of £2.7bn were up by 22.5 per cent.
Chief executive Ivan Menezes said: “This performance demonstrates our world-class brand building capability, supply chain excellence and agile culture, and reflects the strength of our portfolio across geographies, categories and price tiers.
“In the off-trade channel, where consumer demand has remained resilient, we have gained or held market share across the majority of our measured markets. We also benefitted from the continued recovery of the on-trade channel, particularly in Europe and North America.
“While we expect near-term volatility to remain, including potential impacts from Covid-19, global supply chain constraints and rising cost inflation, I am confident in our ability to successfully navigate these disruptions through the remainder of the year.”
Richard Flood, investment manager at Brewin Dolphin, the wealth management firm, said: “Diageo has produced a great set of results with a strong increase in sales, margin and profits over the past six months.
“The continuing shift by consumers to spirits consumption has benefited the company, as this is a sector of the drinks market that it dominates.
“Diageo has been able to successfully navigate the challenges of Covid with its strong presence in both the off-trade, as well as the pubs sector – or on-trade – which is expected to recover further as Covid fades, leaving Diageo well positioned for the future.”
Richard Hunter, head of markets at investment platform Interactive Investor, noted: “Diageo has again proved its worth as a core portfolio constituent, with a performance which has underlined both its pricing power and its ongoing growth potential.
“Despite tough comparatives to come in the second half, Diageo’s outlook is also upbeat, with net sales momentum expected to continue, bolstered by the recovery in the on-trade business and, restrictions permitting, a further return to normality within the travel retail business.”