Diageo GB net sales grow 4%

By Jo Gilbert

Published: 28 July, 2016

Diageo Great Britain has posted its third year of continuous growth with net sales up 4%.

The drinks giant reported its full-year 2016 preliminary results this morning (July 28), when it revealed that Baileys, one of the company's six 'global giants' saw an accelerated performance with net sales up 11% driven by increased off-trade visibility and on-trade activation.

Smirnoff and Guinness failed to make as big an impact, with both brands' net sales climbing just 1%.

Tanqueray net sales grew by double digits and the brand gained 2pps of share in the gin category, driven by expanding distribution with improved visibility and increased bartender advocacy.

Reserve brands continued to drive profitable growth with net sales up 26% driven by Cîroc and scotch malts.

Charles Ireland, general manager GB, Ireland and France, said the GB business is delivering its highest rate of top-line growth for a decade.

He said: "This strong performance has been driven by the success of the reserve business, where Cîroc has overtaken Grey Goose to become the leading super premium vodka brand in 2015 (IWSR data), the strength of our innovation pipeline, a solid performance from our premium core brands and another year of growth for Guinness, with net sales were up 1% in Great Britain.

"This second full year of growth for Guinness was driven by the Brewers Project innovation, where distribution for Hop House 13 grew to over 1500 outlets, the effectiveness of the Made of More campaign, and our activations around sporting occasions and St Patrick's Day. "

Globally, Diageo's total net profit was £2.24 billion on full-year sales totalling £10.49 billion.

Diageo, whose flagship brands are Johnnie Walker, Smirnoff, Captain Morgan, Bailey's, Tanqueray and Guinness, saw its organic results improve with volume growth of 1.3%, net sales growth of 2.8% and operating profit growth of 3%.

Jeremy Cunnington, senior alcoholic drinks analyst at Euromonitor, said: "Diageo's acquisition of UB Group's spirits operations, United Spirits, almost doubled its volume share of global spirits to 10%. This made it the undisputed leading distiller by volume in the world, having for years fought it out with both Pernod Ricard and United Spirits. It also makes Diageo the leading player in the largest region by volume, Asia Pacific.

"However, it is open to question whether it will be able to capitalise fully on massive growth potential. Many of Diageo's new brands are struggling due to a lack of investment by the previous owner and their economy focus. More importantly, the key growth in Asia is in China and its local baijiu product. While Diageo has a foothold in the category, it is a small one at the upper end of the market, while growth is being driven by economy products.

"Diageo's leadership in Asia Pacific means that in all regions except Latin America (where it is second) and Eastern Europe (11th) it is the leading spirits company by volume. However, with the company losing share in some of them, notably North America, it has work to do to capitalise on growth in spirits."

Reserve brands continued to drive profitable growth in the UK with net sales up 26% driven by Cîroc and scotch malts.

Having grown consistently for the last three years, Cîroc grew volume by 30% over the last twelve months, again in the UK.

Share gains in Scotch whisky have come through a focus on new flavour led malts, particularly Talisker Skye and Dalwhinnie Winter's Gold.

Diageo GB Innovation reported another successful year, growing net sales value by 20%.

In Europe, net sales were up 3% with Great Britain and continental Europe the main contributors and with share gains across the market.

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