UK – British multinational alcoholic beverages company Diageo has recorded a 15.8% rise in half-year net sales to £8 billion (US$10.71 billion), driven by growth across all of its regions.
The producer of Guinness beer and Johny Walker whisky reported broad-based growth across most categories, with a particularly strong performance in scotch, tequila, and beer.
For the six months to 31 December, Diageo’s operating profit increased 22.5% to £2.7 billion (US$3.6 billion), 16 percent more than a year ago and also higher than the same period in 2019.
The company has benefited from shoppers stocking up during the pandemic, often trading up to more expensive types of alcohol.
Limited editions of Johnnie Walker sold particularly well, Diageo said. Other strongest performers were the tequila brands Casamigos, acquired from actor George Clooney in 2017, and Don Julio, with sales in the category up more than half year on year.
The world’s largest spirit maker reported that sales of premium products made up more than 50% of net sales.
Meanwhile, the company has benefitted from the continued recovery of the on-trade channel – particularly in Europe, where net sales were up 21%, and North America, where sales were up 10%.
Diageo chief executive Ivan Menezes said that consumer demand has remained resilient in the off-trade channel.
“I am very pleased with our financial results, which build on our growth momentum in fiscal 21. We delivered strong organic net sales growth across all regions and operating margin expansion,” said Menezes.
Yet in the latest sign of continued supply chain disruption, Diageo executives said the company, whose brands include Gordon’s gin, Smirnoff vodka, and Baileys Irish Cream, had struggled to meet the demand for some products.
Glass shortages have prevented it from sourcing enough bespoke bottles for Bulleit, its Kentucky bourbon, while a lack of aged liquor supplies has held back growth of tequila and its Canadian whisky brand Crown Royal.
Menezes however expressed his confidence in Diageo’s ability to navigate disruption caused by global supply chain constraints through the remainder of the year.”
The London-listed company said it was planning to accelerate the return of up to £2.6bn in capital to shareholders as part of a goal to complete a £4.5bn capital return program by June 2023, a year sooner than scheduled.
Shares in Diageo, which have lost almost 11 percent so far in 2022, rose 0.4 percent in early trading, continuing an upward trend that dates back to November last year when the company said it expects organic net sales growth to be between 5% and 7% for its 2023-2025 financial years.
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