SMIRNOFF ICE SALES DENT DIAGEO ANNUAL RESULTS

Published: 23 July, 2008

Falls in the sales of Diageo's Smirnoff Ice RTD brand on both sides of the Atlantic have harmed an otherwise up-beat trading statement from the world's biggest distiller. While the RTD category in Britain has not yet recovered from the impact of the increased excise duties in 2002, Smirnoff Ice has in part offset this impact through further share gains and the successful launch of Black Ice. However, volume of Smirnoff Ice RTDs will be down about 3% for the full year,' stated the company. Across the sea in the US, where the RTD segment has been the biggest growth market in recent years, volumes were down a disappointing 12%. Overall the city welcomed the announcement, as there had been fears that the update would contain a profit warning. Paul Walsh, Diageo's CEO, said he expected total sales volumes to be up around 9% despite trading conditions remaining tough'. This growth was mainly due to brands acquired from Seagram performing above original projections'. All consumer goods companies have faced an environment of declining consumer confidence and significant global events,' Walsh explained. Despite these circumstances Diageo will deliver consistent performance in top and bottom line organic growth, continued growth in [the eight] priority brands and improved share.' In the UK, Smirnoff Ice's parent brand Smirnoff Vodka, was the star performer, with volumes higher then ever', while Baileys is now a one million case brand. The performance of Diageo's brands in Spain was also good with volumes up around 14% in the second half of the year and the volume of J&B whiskey up 8%.

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