Belfast Telegraph

Not good for Guinness, but Diageo toasts sales

By Philip Whiterow

Drinks giant Diageo hailed its performance in emerging markets after profits rose despite sales of Guinness falling again in Europe.

Sales of the famous stout declined 5% across the continent, with volumes in core markets of the UK and Ireland hit by economic conditions, pub closures and the rise in VAT, as well as other duty increases that shifted drinkers towards supermarkets and off-trade outlets.

Irish volume and net sales were down 1% and 5% respectively.

The company currently employs around 402 people in Northern Ireland.

A spokesman for Diageo Ireland said no jobs were at risk in the Republic or Northern Ireland.

Spirits did better than Guinness, with a strong showing by deluxe brands such as Johnnie Walker Blue Label Scotch and Tanqueray gin, while wine sales also picked up to lift UK sales overall by 2%.

Ireland's net sales also saw a 2% rise.

European revenues overall fell by 5%, which triggered a 23% slump in profits in the region to £621m, with sales in Spain and Greece especially weak due to the grim economic situation in the two countries.

Total sales in the year to June rose 2% to £9.94bn, with profits overall 5% higher at £2.36bn as Scotch and vodka sales in emerging markets - led by Johnnie Walker and Smirnoff - and good sales of top end brands in more mature markets offset the problems in Europe.

Elsewhere in the UK, Diageo said it has added three new products to its fast growing pre-mix segment, such as Gordon's gin and tonic and Smirnoff vodka and cranberry, which had boosted its share of the UK market to over 50%.

Marketing spend was focused on innovation in areas such as pre-mix and also the super premium end of the market, Diageo added.

The group, which in May announced a drive to save £80m by 2013, saw profits rise by 9% in North America and by 8% in Asia Pacific.

Chief executive Paul Walsh added that while the group was not immune to the global economic uncertainties, the figures were a "strong platform" to achieve its targets of 6% organic annual sales growth, a 2% margin improvement and double digit earnings per share growth over the medium-term.


The percentage decline in sales of Guinness across Europe