Guinness owner Diageo has today reported an unexpected rise in underlying net sales growth for the first half of its year on strong demand for spirits like tequila at retail stores in the United States, sending its shares up 4%.
Alcoholic drink makers have been hit as the pandemic closed bars, restaurants and night clubs around the world and as travel was restricted.
But Diageo, which also makes Johnnie Walker whisky, produced a strong performance in US.
The US generates 80% of Diageo's sales from off-licences and grocery stores and accounts for nearly 45% of group profits.
North America sales rose 12% in the six months to December 31, driven by strong consumer demand and a continuing shift towards spirits over beer and wine.
Retailers also replenished more stock ahead of the Christmas season.
Don Julio and Casamigos tequilas were the strongest performers, followed by Ciroc Vodka and Bulleit bourbon, while beer sales fell 15% due to Covid-19 restrictions on pubs and restaurants in North America.
In other big markets, such as Europe, bars and restaurants make up most of Diageo's sales and profits.
"Even though the external environment continues to be volatile, we do expect to see good improvement in top line across all our regions in the second half," chief financial officer Kathryn Mikells, who will be leaving the company in June, told Reuters.
Overall, Diageo, the world's largest spirits maker, reported a 1% rise in organic net sales growth, compared with expectations for a 4.6% drop, according to company supplied estimates.
The group stayed away from issuing any specific annual sales outlook, but said it expected sales growth in all regions in the second half of the year, given easier comparables with last year.
Diageo's net sales declined 10%, in Latin America and the Caribbean they fell 1%, while in Asia Pacific they fell 3%. Only Africa posted flat net sales growth, on a strong performance in Nigeria.
Adjusted earnings fell nearly 13% to 69.9 pence per share, but beat the 67.8 pence analysts had expected, hit by higher operating costs and a stronger pound.
Diageo also raised its interim dividend by 2% to 27.96 pence per share.
