Belfast Telegraph

Guinness owner says UK sales are falling behind Europe

By Jamie Grierson

Guinness and Bushmills owner Diageo has warned that sales in the UK are falling behind its continental neighbours - although Britons are still lapping up vodka and Baileys.

Diageo is exposed to several struggling eurozone economies, such as Spain, Greece and Ireland, which have all posted falling sales as the wider problems flowing from the debt crisis lead to a squeeze in consumer spending.

Smirnoff, whiskey and cream-based liqueur Baileys remained popular in the six months to December 31, but overall sales still declined in the UK and were flat in Europe, which was supported by double-digit growth in France and Germany.

Diageo, which saw a 12% rise in pre-tax profits to £1.8bn in the period, said UK sales were hit by a decision to hold firm on prices and cut promotions.

Elsewhere, Latin America remained the company's strongest market with 23% sales growth, compared with 12% growth in Africa, 10% in Asia and 5% in North America.

Andrew Morgan, Diageo Europe president, said: "The economic environment, particularly in southern Europe, has impacted our performance in western Europe, while in the emerging markets of Europe we have delivered strong growth."

Smirnoff vodka was up 8% in the period, driven by sales in the UK and Germany, while Captain Morgan grew by 25% in the region, although it has a relatively small hold in Europe.

The company, which employs 20,000 staff worldwide, has fully integrated its recently-bought Mey Icki brand in Turkey as it looks to increase its exposure overseas.

Diageo, which sells its drinks in 180 countries across the globe, also has high exposure to emerging markets which have supported the half-year performance.

In Africa, Guinness sales were 10% ahead, while scotch label Johnnie Walker was up 32% and in Latin America the performance was driven by a 32% rise in Smirnoff sales.

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