UK – Multinational beverage alcohol company, Diageo has defied analysts’ forecasts of a 16.1% rise by reporting a sales jump of 21.4%, totaling £15.5 billion (US$18.9 billion) in the year to 30 June 2022.

The Don Julio tequila and Johnnie Walker whisky owner said it had benefited from growth in sales of high-end drinks contributing 57% to its reported net sales

The growth was evident in particular brands including scotch, tequila, and Chinese white spirits – as drinkers traded up to more expensive brands.

Also, with the shift of Diageo’s portfolio into more expensive drinks over time; “super-premium” bottles now make up 27% of sales, up from 16% in 2017.

The spirit maker said these drinks have accounted for almost a third of its net sales growth since 2019.

Meanwhile, sales of Johnnie Walker whisky, calculated on a like-for-like net basis, were up 34%, while sales in the “super-premium-plus” category, which includes the Johnnie Walker Blue Label, rose 31%.

The company added that its sales were also increased by the partial recovery of travel retail sales, as consumers resumed international trips after the pandemic.

Since the start of Russia’s invasion of Ukraine, Diageo said it was able to raise prices to “more than offset” its cost inflation of roughly 7-8%.

That cost inflation is not expected to abate this full financial year, the London, UK headquartered, global beverage company said.

Geographically, in North America, net sales grew 14% to £6.1billion largely driven by US spirit sales where bars and restaurants recovered well, while supermarket sales remained resilient.

Europe reported net sales of £3.2billion, up 30% which reflects the recovery of bar and restaurant sales, particularly in Ireland, Great Britain, and Southern Europe.

Net sales grew 16% in the Asia Pacific region, to £2.9billion driven by strong growth in India and Greater China and a partial recovery of Travel Retail Asia and the Middle East while underlying operating profit rose 17% to £711million.

Africa saw growth across all markets with net sales up 22% to £1.7billion, having an operating profit growth of 84% totaling £315million, as price increases and cost saving more than offset inflationary pressure.

Latin America and the Caribbean reported net sales of £1.5billion, up 43% with double-digit growth across all markets.

A higher proportion of premium brand sales and price increases mostly offset marketing investment and cost inflation in the two markets, which meant operating profit grew 78% to £538million. (£1:US$1.02)

Diageo’s chief executive, Ivan Menezes said: “I am particularly proud of the performance of Johnnie Walker, which delivered double-digit growth across all regions to surpass 20 million cases globally.”

However, he added the company was keeping an eye on rising inflation and the cost-of-living crisis for the coming year.

Menezes cautioned: “We expect the operating environment to be challenging, with ongoing volatility related to Covid-19, significant cost inflation, a potential weakening of consumer spending power.

The uncertainties also encompass global geopolitical and macroeconomic uncertainty. We continue to closely monitor consumer trends to enable us to respond quickly.”

Lavanya Chandrashekar, chief financial officer, said the company continued to benefit from a shift towards spirits from wine and beer as well as from a strategy of moving its portfolio upmarket.

He added that consumers are becoming very discerning and willing to spend a little extra for that very special occasion.

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