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Diageo boss urges UK to protect Scotch

Published:  28 July, 2016

The chief executive of drinks giant Diageo has made a plea to UK governments to keep the Scotch market "healthy and competitive" in a post-Brexit climate.

Responding to the possibility that First Minister Nicola Sturgeon is pushing for another Scottish Independence referendum, Ivan Menezes told CNBC: "Our message to the Scottish and UK governments is clear: create the conditions to keep what truly is one of the jewel businesses of the UK and Scotland healthy and thriving."

He added: "Our focus is Scotch whiskey. We've got to make sure that this vibrant, very successful export business has the conditions to comepete on the global stage."

The comments were made following the release the company's reported full-year 2016 preliminary results this morning (July 28) in which Scotch was highlighted as a priority for the global drinks maker.

In a statement included in the report, Menezes said Diageo had seen "significant improvement" in the performance of its Scotch portfolio, which includes Johnny Walker as one its flagship brands.

Also in the interview, which was broadcast from London, Menezes was unperturbed by Diageo's slim volume growth of 1.3% globally and said the company is on track to reach its objective of mid-single digit growth over the next three years to 2019, delivering 100bps of organic operating margin improvement.

He said: "I'm pleased - this is back from a couple of years of volume decline. Our volume converts with price and mix into higher revenues. People around the world are drinking better and choosing better brands. We do expect volume to improve, but mix and price effects will also be very positive. Our objective of driving mid single digit top line growth and margin expansion to 100 points in the next three years - I feel confident about our ability to deliver that."

"These results position us well to deliver a stronger performance in F17," he added.

According to Euromonitor International, Diageo is the top spirit company in the world with 9.4% shares in volume terms in 2015, up from 4.50% in 2010.

Diageo recorded 18% CAGR growth in 2010-2015, which corresponds to 1 billion additional litres of spirits sold in the last five years.

The global spirits market grew by 2% CAGR in 2010-2015.