Diageo GB: wine business grows 14%

Published: 25 August, 2011

Diageo's wines business in Great Britain delivered "strong results" with net sales growth of 14% ? driven by a healthy Bordeaux campaign, growth in en primeur, and price increases on Blossom Hill.

Globally, the drinks giant posted full year net profits up 17% to £1.9bn, citing emerging markets as the main growth driver. Scotch whisky volumes were up 16% in emerging markets, while its premium reserve portfolio, which includes Zacapa rum and Tanqueray 10 gin, grew 24% in developed markets.

Diageo expanded its presence in the faster growing markets with a controlling stake in Serengeti Breweries in Tanzania, an equity stake in Halico in Vietnam, the acquisition of Mey Icki in Turkey, an additional investment in ShuiJingFang in China and a controlling stake in Zacapa super premium rum, totalling £1.6 billion.

Andrew Cowan, country director for Diageo GB, said Great Britain "has shown resilient performance and delivered organic net sales growth of 2% in what remains a challenging consumer environment".

Spirits performed well and delivered strong value share growth in spirits with year on year value share increase of +0.6 percentage points in total trade.

"Total beverage alcohol (TBA) value growth] in the GB market overall was +4.1 percentage points (ppts), with the on-trade +4.2% and off-trade 3.9%*. However overall volumes are in decline at -1.0% for the total trade," said Cowan.

Strong performance came from the super premium brands, with "super deluxe" Scotch showing 30% net sales growth. "Highlights included The Singleton, which remains the UK's fastest growing malt whisky over the last two years, Talisker which gained share against its key competitors, and Tanqueray which has benefited from sponsorship of the Goodwood Estate," said Cowan.

Net sales of Smirnoff declined in GB, "due to a lower volume and negative channel mix", but Smirnoff Flavours was identified as the leading flavoured vodka in BWS. The rebranded 'Captain Morgan's Spiced', also gained share and delivered double digit net sales growth supported by incremental spend on advertising and digital campaigns.

Healthy growth in the premix market, with the launch of three new products (Smirnoff and Diet Cola, Archers and Lemonade and Bells and Ginger) backed by marketing spend led to share gains.

Guinness sales were down, "driven by the decline in the overall beer category, a consumption shift into low Guinness Draught share outlets, competitive pressure from cask ale and the hottest twelve months on record", said Cowan.

"Diageo Great Britain will continue to build on the successes of this financial year and focus on our strategic initiatives of customer marketing and pricing and promotional effectiveness," concluded Cowan.

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