Diageo toasted by City after strong sales growth
Diageo said sales in Great Britain “were broadly flat” in the second half of 2016 as global sales rose 4.4%.
The strong global performance was hailed by analysts as the key driver of the FTSE 100 climbing 6.66 points and was helped by surging spirits sales in the US.
In the six months to December 31, 2016, Diageo grew operating profit by 28% to £2.06 billion, with volume sales growing 2%.
In the UK the supplier – whose portfolio includes Smirnoff, Guinness, Baileys and Gordon’s – increased its share in the off-trade.
Charles Ireland, general manager for Diageo Great Britain, Ireland and France, said: “Net sales for the six months ended 31 December 2016 were broadly flat, driven by changes in selling patterns across channels resulting from an increase in our commercial footprint.
“This performance was delivered through maintained momentum of the Guinness brand, healthy premium core portfolio performance, continued growth of the luxury reserve business, several successful Innovation initiatives and impactful activations with our customers.
“Within the premium core portfolio, Baileys delivered a good performance with net sales up 2% driven by improved on-trade activation and the success of its Christmas campaign in the off-trade. Baileys delivered over 100,000 samples in the period from London Cocktail Week to Christmas and over 2,000 Baileys’ hot chocolates were sold in the first week of Edinburgh’s Christmas market.
“Captain Morgan performed well, with solid volume growth and it is now the biggest brand in the rum category in Great Britain, overtaking Bacardi in value share.
“The brand continued its partnership with Leicester City’s captain, Wes Morgan, and launched its first dedicated out of home responsible drinking programme message/programme reminding consumers that ‘Only Anchors Go Overboard’ during the festive season.
“Tanqueray net sales grew 42% due to expanded distribution within the gin category. Smirnoff gained share in both the off-trade and on-trade through strong promotional activity and increased levels of activation in-store.
“Guinness successfully lapped last year’s Rugby World Cup, gaining share. This was driven by strong consumer demand for the core Guinness brand and the continued success of The Brewers’ Project initiative, in particular with the continued success of Hop House 13 lager. Hop House 13 has continued its strong performance, beating sales expectations and has now become one of Diageo’s most successful beer innovations in recent years in Great Britain.
“Reserve brands experienced profitable solid growth, driven by scotch malts and Tanqueray No. TEN. Ciroc has increased its share of vodka and share gains in Scotch whisky have been boosted through a focus on flavour led malts.
“Innovation in Great Britain continues to be a key focus, with the portfolio growing by 13%. Highlights include Smirnoff cider, which provided access into the key growth category of flavoured cider, and the launch of Haig Club Clubman in August. Launched in partnership with David Beckham and Simon Fuller’s XIX Entertainment, Haig Club Clubman builds on the continued success of Haig Club and is already ranked in the top 13 whisky brands in GB grocery.”