Diageo's first half sales growth slows

Thursday 30 January 2014 16.05
Diageo says Guinness sales declined by 1% globally in its fiscal half year
Diageo says Guinness sales declined by 1% globally in its fiscal half year

Diageo, the world's biggest distilled spirits company, today reported a 1.8% rise in sales for the first half of its fiscal year.

Diageo includes Guinness, Johnnie Walker whisky and Smirnoff vodka among its main brands.

In the six months ended December 31, net sales rose 4.6% in North America and 1.3% in emerging markets.

Sales fell 1% in western Europe. Earnings before items were 62.6 pence per share.

A Chinese government crackdown on gift-giving and personal spending by civil servants has hammered sales of spirits like cognac and baiju, eroding sales for Diageo and its rivals, Pernod Ricard and Remy Cointreau.

But compared with its French rivals, Diageo has the benefit of a broad geographic footprint, following the purchase of local drinks firms in places like Turkey, Brazil and India.

Beer was the company's only category to decline, and sales were down 2.6% due to weakness in Ireland and Nigeria.

Diageo said that Guinness sales declined by 1% globally but performed well in East Africa, North America and South East Asia. 

Guinness sales in Ireland fell by 6%, partly due to last year's hot summer weather.

Sales of Baileys in the six month period grew in North America, as well as in Latin America and China. European sales fell marginally. 

Bushmills whiskey net sales grew by 13% globally, with a strong performance in Russia, Eastern Europe, Germany and Austria.

"We have continued to demonstrate the strength of our broad portfolio and diverse global business in a period which saw a more challenging emerging market environment," commented the company's chief executive Ivan Menezes. 

"Sustained performance in the US and improved performance in Western Europe enabled Diageo to absorb the current challenges in some of our emerging markets," he added.

The CEO said the business is in good shape for the medium and long term, adding that it remains committed to achieving its performance ambition.