Guinness sales jumped 30% in the UK as pubs reopened
(Picture: Diageo)Diageo, the FTSE 100 drinks giant, has reported soaring sales and profits thanks to the reopening of bars and restaurants around the world drives.
Diageo — which owns Guinness, Tanqueray gin, Johnnie Walker scotch and Captain Morgan’s rum among many others — said sales jumped 20% in the six months to 31 December. The business saw “double digit growth” across all markets.
The relaxation of restrictions around the world saw sales at bars and restaurants rebound after being battered by lockdowns. Guinness sales jumped 30% in the UK as Brits returned to the pub.
At the same time, drinkers continued to buy bottles to enjoy at home, with no noticeable drop off in so-called “off trade”. People are increasingly buying “premium” bottles of spirits, which have healthy margins and help insulate the company against rising costs.
Operating profits grew 22.5% to £2.7 billion in the first half as Diageo’s margins improved despite an increase in marketing.
CFO Lavanya Chandrashekar said growth had been “broad-based” but called out “stand out” performers tequila, scotch and beer.
Rising demand for scotch accounted for a third of all net sales growth, while tequila sales surged by 56%. Customers are snapping up high-end bottles from brands such as Casamigos, the tequila brand founded by George Clooney and bought by Diageo for up to $1 billion in 2017, and Don Julio.
Chandrashekar said: “For the last couple of years we’re seeing customers favouring scotch, US whisky, they’re favouring tequila. The benefit of Diageo is we have a broad portfolio.”
One weak spot was rum. Sales of Captain Morgan, one of Diageo’s biggest brands, dropped by 15% in the US. Chandrashekar said Diageo had recently launched a partnership with the NFL to help turn around performance.
Diageo hiked its interim dividend by 5% to 29.36p. The company is also accelerating a planned £4.5 billion share buyback, which is now due to complete in 2023.
CEO Ivan Menezes said: “While we expect near-term volatility to remain, including potential impacts from Covid-19, global supply chain constraints and rising cost inflation, I am confident in our ability to successfully navigate these disruptions through the remainder of the year.
“We continue to expect organic net sales to consistently grow within a range of 5% to 7% and organic operating profit to grow sustainably within a range of 6% to 9%.”
Richard Hunter, head of markets at Interactive Investor, said: “An evolving middle class in many of the emerging markets has boosted sales, while the current penchant for new and exotic spirits is something on which the likes of Diageo can continue to capitalise.”
