Diageo reports 16% organic growth in full year revenues driven by sales rebound in North America

UK – British multinational alcoholic beverage company Diageo has recorded an 8.3% increase in full-year net sales, driven by the reopening of bars and restaurants in North America and demand for its premium spirits portfolio. 

The owner of Johny Walker whiskey and Smirnoff vodka saw its full year net sales rise to £12.7 billion (US$17.66 billion), representing a 16% organic growth – driven by growth across all regions. 

Reported operating profit increased 74.6% to £3.7 billion (US$5.14 billion) primarily due to a significant reduction in exceptional operating items compared to fiscal 2020, and a 17.7% growth in organic operating profit. 

Diageo says it benefitted from resilient consumer demand in the off-trade channel, while the on-trade remained restricted in many markets (particularly impacting beer in Europe) and disruption in travel retail continued. 

The company’s strong performance was led by its largest market North America, which saw net sales rise 20.2% organically as the easing of lockdowns drove replenishment of stock at bars and restaurants and higher consumer demand for premium spirits in retail. 

In the year ended 30 June, net sales of US spirits went up 24% organically while beer sales recorded net sales growth of 10% driven by 17% growth in flavoured malt beverages. 

Diageo said it’s Africa region saw organic net sales rise by 20% thanks to resilience in the off-trade market. However, slower growth was experienced in South Africa where there were trade restrictions and temporary bans on alcohol sales. 

Europe & Turkey posted 4% organic growth primarily driven by Northern Europe, Turkey and Great Britain while sales in Latin America and Caribbean went up 30%.  

Meanwhile, Asia Pacific net sales grew 14%, representing a strong recovery in China and off-trade momentum in most markets. 

“I am very pleased with the strong financial results we have delivered in fiscal 21, while continuing to invest in long-term sustainable growth,” said Diageo CEO, Ivan Menezes. 

ADVERT

As part of its investment, the company has expanded its gin and ready-to-drink portfolios through acquisitions such as Aviation American Gin and Chase Distillery. 

“While our business has recovered strongly in fiscal 21, with net sales growth on a constant basis ahead of fiscal 19 in three of our five regions, we expect near-term volatility in some markets,” Menezes added. 

“However, I remain optimistic about the growth prospects for our industry, with spirits continuing to gain share of total beverage alcohol globally and premiumisation trends remaining strong.” 

Diageo said it expected organic net sales momentum to continue into fiscal 2022, but with volatility in the short term.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE

Other Posts Worth Reading

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.