Demand from US drinkers for expensive whiskies and new spirits is helping Diageo to offset slowing growth in some emerging markets, the world's biggest spirits maker said today.
In its first set of results under new boss Ivan Menezes, the maker of Guinness and Johnnie Walker whisky met forecasts with an 8% rise in annual operating profit and stuck to its medium-term growth targets.
Faced with sluggish demand in recession-hit Europe, Diageo has been expanding in emerging markets, where it aims to make around half of its turnover by 2015, compared with 42% now.
But the move has not been without its problems, with slowing economic growth and changes to certain laws including taxes dampening demand in some of these markets.
Rival Remy Cointreau recently warned of tougher trading in China.
However, a growing number of companies report a recovering US economy is taking up the slack. German fashion house Hugo Boss, for example, noted strong US demand today, echoing luxury peers LVMH and Kering.
Diageo said US demand for premium whiskies and new products like Crown Royal Maple helped to make up for slower sales growth in some emerging markets such as China, Brazil, Nigeria and South Korea in the year ended June.
Group organic net sales, which strips out currency moves, acquisitions and excise duties, rose by 5%, slightly above analysts' average forecast of 4.8%. That included a 5% increase in North America, which outstripped a 3% rise in the Asia-Pacific and a 4% decline in western Europe, although still lagged growth in regions such as Africa, Eastern Europe and Latin America.
The company said that its southern European markets, as well as Ireland, faced another very tough year and net sales declined 11%. It noted that the Irish beer market contracted across all channels due to the weak economy, while sales of Guinness declined by 5%. However it said that as a result of increased investment, the brand gained share in the last quarter.
Diageo's operating profit was up 8% to £3.5 billion, in line with analysts' average forecast, and the company raised its full-year dividend by 9% to 47.4 pence a share.
The company said it had suffered some weakness in Brazil due to changes to drink driving laws, social programmes and tax laws which had resulted in some destocking amongst distributors.
China has also been hit by a general slowdown in the country's economy relative to recent years and a crackdown on extravagant consumption and the giving of gifts for favours due to fears it can feed corrupt habits.