Diageo GB: sales growth driven by premium brands and innovation

Diageo GB has reported its third year of continuous growth for its GB portfolio, driven by the success of its Reserve business, innovation pipeline and Guinness.

The company saw net sales rise by 4% with strong sales posted by brands in its Reserve business. Within this portfolio its Ciroc brand overtook Grey Goose to become the leading super premium vodka brand in 2015, according to IWSR data.

For the full portfolio of Diageo Reserve brands sales rose 26%, driven by Ciroc and Scotch malts. Volume sales for Ciroc grew by 30% over the past 12 months, while Tanqueray net sales growth also hit double digits, driven by expanding distribution and improved visibility.

For its Scotch whiskies, Diageo GB said it has grown its share of the market through a focus on new flavour led Malts, particularly Talisker Skye and Dalwhinnie Winter’s Gold. Over the three month Christmas period, Talisker Skye contributed 62.8% of total Malt whisky value growth within the GB off-trade (Nielsen, 12 weeks to 27 February, 2016).

Charles Ireland, general manager GB, Ireland and France added: “This year also marked the 200th anniversary of Lagavulin with celebratory events and tastings in Islay and around the world.”

Guinness also aided growth for the business, Ireland said. Net sales for the brand were up 1% in Great Britain and this marks the second full year of growth for the brand, driven by the Brewers Project innovation and activations around sporting occasions and St Patrick’s Day.

Meanwhile, a key driver for Diageo GB Innovation also stemmed from the Guinness brand: this growth has been attributed to the launch of Guinness Hop House 13. In addition, the continued success of Baileys Chocolate Luxe (now in its third year), the launch of Smirnoff Cider, more flavours for Pimm’s and new premix formats also helped this arm of the business.

In the Premium Core portfolio, Baileys saw net sales rise by 11% “driven by increased off-trade visibility”, according to Ireland, as well as a range of digital and marketing activity.

Pimm’s also did well in the off-trade last year with sales up 7.1% and volume sales also up, by 12.4% (Nielsen, total off trade, to 18 June 2016). Pimm’s was a core partner of The Patron’s Lunch. The event on the Mall saw 10,000 Pimm’s cans distributed as well as 180 kegs of Pimm’s and 4,000 strawberries. 

Overall net sales grew 2.8% at the Smirnoff and Guinness supplier, with North America, Latin America and Europe the best performing regions.

Net profits stood at £2.24 billion, down from £2.38 billion a year earlier as tumbling exchange rates hampered its performance in Africa and Brazil.

The pound has struggled since the surprise Brexit vote last month, and this has helped Diageo’s exports to the US as the dollar has strengthened, but a weak pound has hurt it in other markets, including Turkey, Nigeria and South Africa.

With regards to the referendum result, Diageo said it is working "closely with government and industry bodies to ensure its views are reflected in the transition process".

It added that it “welcomes the formation of a specialist international trade department, as it is important for Diageo that the UK continues to benefit from open access to the EU as well as favourable international trade agreements”.

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