Diageo sales up 1%

10 February, 2011

Diageo GB has seen drinks sales rise by 1% over the past six months, the company has reported in its interim results.

Managing director Simon Litherland said: “Great Britain remains a challenging consumer and economic environment, although we are seeing some signs of a fragile recovery. Across the country, the industry and our consumers continue to feel the effects of the duty escalator and VAT increase on alcohol beverages.”

Diageo’s growth came in spite of customers stockpiling ahead of last June’s anticipated duty hike, and its spirits brands grew their share of the market by 0.9 percentage points in the off-trade.

The company has boosted its marketing spend by 3%, including raising investment behind Smirnoff by 4%, focused on the brand’s Nightlife Exchange Project and innovations including Smirnoff & Cola pre-mix cans.

Litherland said Diageo’s Reserve business put in a “robust performance”, with Tanqueray notably growing off the back of its sponsorship of the Goodwood Estate.

“Our wines business delivered strong results, with net sales growing 18%. A strong price and mix improvement was driven by price increases on Blossom Hill, the move out of lower value wine brand variants and sales of high value en primeur wines,” he said.

Guinness’s net sales declined, with the brand being hard hit by the contraction of the on-trade, and consumers choosing lager over stout and ale during the 2010 football World Cup.

Litherland said: “Diageo GB will continue to focus on building collaborative customer relationships in both the on and off-trade as we expect the consumer environment to remain challenging. We will continue to invest in our brands to create sustainable and profitable growth for our customers and ourselves. We have some exciting consumer marketing campaigns coming up, including a new summer campaign for Pimm’s, and are looking forward to the Six Nations rugby campaign, St Patrick’s day in March and the Royal Wedding in April.”

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