UK – Multinational drinks group, Diageo has said it expects to grow organic net sales in the double digits in the first half of the year, based on increased brand investments and a rapid consumer shift towards high-end brands.
The Johnnie Walker whisky and Tanqueray gin maker said it expects organic net sales growth of at least 16% in the first half of its fiscal 2022 year ending June 30 and organic operating profit growth to be ahead of sales growth.
Diageo further revealed that it expects organic sales growth of between 5% and 7% in the fiscal 2023-2025 period, compared with the 4% to 6% growth during 2017-2019. It also sees operating profit growth in a range of 6% to 9% for fiscal 2023-2025
“While we expect inflationary pressures to increase, we also expect to benefit from operating leverage, premiumisation, revenue growth management and productivity gains,” Chief Financial Officer Lavanya Chandrashekar said in a statement.
The pandemic has been a boon to Diageo as locked-down consumers stocked up on alcohol and beers and traded up to more premium versions due to higher savings.
The company ended fiscal 2021 with one of the highest growth rates in its history, propelled by strong at-home demand in the United States and partly due to the re-opening of bars and restaurants in Europe where vaccination is more widespread.
Following the strong performance in 2021 and a strong prospect for 2022, Diageo is confident that it can grow its total beverage market (TBA) shares even further.
“TBA is a large, growing and attractive sector of which Diageo currently has a 4% value share. With continued investment in marketing, digital capabilities and our people, we have significant headroom for growth,” said Ivan Menezes, Chief Executive, Diageo.
“This gives us the confidence that we can grow Diageo’s value share of TBA from 4% in 2020 to 6% by 2030.”
Diageo’s sales forecast was well received in the capital market with shares of the world’s largest spirits maker, part of the UK’s blue-chip FTSE 100 index, rising as much as 3.4% to hit a record high of 3,948 pence.
Rival Pernod Ricard, known for Absolute vodka, also said it expects strong growth in fiscal 2022, with a bit of moderation to what it had seen during the pandemic.
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