Yahoo Finance Diageo sales up 20% amid thirst for ‘super-premium’ spirits
Drinkers have been filling their glasses with “super-premium” spirits, boosting the annual sales of the drinks firm Diageo by a fifth, as the return to bars and restaurants after the pandemic continues apace.
Brands such as Don Julio tequila, Johnnie Walker whisky and Casamigos – the tequila company co-founded by George Clooney – highlighted consumers’ growing taste for “super-premium plus brands”, the company said, even at a time of rising prices and a squeeze on incomes.
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Diageo’s sales jumped by 21% to £15.5 billion in the year to 30 June, ahead of analysts’ forecasts.
The spirits maker said it had benefited from growth in sales of high-end drinks – in particular scotch, tequila and Chinese white spirits – as drinkers traded up to more expensive brands. As a result, “premium-plus brands” contributed 57% to its reported net sales.
The company, which also owns Smirnoff vodka, Tanqueray gin and Captain Morgan rum, said its sales were also increased by the partial recovery of travel retail sales, as consumers resumed international trips after the pandemic.
Diageo’s chief executive, Ivan Menezes, said the company had done well from the reopening of hospitality venues after the Covid lockdowns, as well as “continued global premiumisation trends” and global price increases.
“I am particularly proud of the performance of Johnnie Walker, which delivered double-digit growth across all regions to surpass 21m cases globally,” Menezes said.
However, he added the company was keeping an eye on rising inflation and the cost-of-living crisis for the coming year.
“We expect the operating environment to be challenging, with ongoing volatility related to Covid-19, significant cost inflation, a potential weakening of consumer spending power and global geopolitical and macroeconomic uncertainty,” he said. “We continue to closely monitor consumer trends to enable us to respond quickly.”
The company said it had been able to raise its prices to offset the increase in costs since Russia’s invasion of Ukraine in late February.
Diageo announced at the end of June that it would wind down its operations in Russia by the end of the year.
Around the world, sales of scotch, tequila and beer grew particularly strongly over the past year. However, in the UK consumers often reached for a bottle of vodka, rum or Baileys, while gin’s popularity decreased.
