Drinks giant Diageo says lockdown driven demand for premium spirits
Drinks giant Diageo says lockdown has driven demand for premium whisky and tequila with customers creating their own cocktails at home as firm reports surprise growth in sales
- Diageo reported net sales fell 4.5 per cent to £6.9 billion at the end of 2020
- However, organic net sales were up one per cent despite the global pandemic
- Firm said spirits growing faster than beer and wine as people indulge at home
Drinks giant Diageo today revealed coronavirus lockdown has driven a demand for higher-end spirits as customers create their own cocktails at home.
The maker of Guinness reported net sales fell 4.5 per cent to £6.9 billion during the six months to December as it took a hit from the closure of pubs and bars during the pandemic.
However, Diageo also confirmed organic net sales were up one per cent despite the disruption, with the firm posting pre-tax profits of £2.2 billion – down 8.3 per cent on the previous year.
The company said sales in North America were particularly strong – jumping 12.3 per cent with strong growth in tequila sales.
Diageo reported net sales fell 4.5 per cent to £6.9 billion during the six months to December as it took a hit from the closure of pubs and bars during the coronavirus crisis. Pictured: Chief Executive Ivan Menezes
Ivan Menezes, Chief Executive of Diageo, told BBC Radio 4 that spirits are growing faster than sales of wine and beer as people discover cocktails and indulge in higher-end brands at home.
He added that Diageo’s premium brands – such as Don Julio tequila, which sells for more than £40 a bottle – have performed very well throughout the pandemic as people ‘drink better.’
Mr Menezes said: ‘Spirits are growing faster than wine and beer as people are discovering cocktails and indulging in higher end brands.
‘There’s a long-term trend towards people drinking better that’s happening all over the world. Not drinking more, drinking better, and our premium brands as a result are performing very well through this period.
‘If you look at tequila for example, brands like Don Julio and Casamigos – which are $50 a bottle – our business in the US was up 60 per cent.
Mr Menezes said Diageo’s premium brands – such as Don Julio tequila (pictured), which sells for more than £40 a bottle – have performed very well throughout the pandemic as people ‘drink better.’
Diageo confirmed organic net sales were up one per cent despite the disruption, with the firm posting pre-tax profits of £2.2 billion – down 8.3 per cent on the previous year. Pictured: Casamigos tequila
‘A brand like Baileys which is all about indulgence at home and with the trend towards at home cooking and treating, Baileys was up double digits so our portfolio and our pivoting to where the consumer occasions at home has worked well.’
He added: ‘We delivered a strong performance in a challenging operating environment, returning to top line organic sales growth during the half.
‘We rapidly pivoted to the channels and occasions most relevant to consumers and invested behind new opportunities.’
Diageo also revealed net sales in Europe and Turkey declined 10 per cent during the six-month period to December, with bosses saying pub, bar and restaurant closures took a hit.
Reduced international travel continued to have a severe impact on sales, which were down 72 per cent in the division.
In Great Britain and Ireland sales of Scotch fell 10 per cent and beer net sales fell 34 per cent – driven primarily by Guinness – although the company pointed out sales of Guinness draft in cans was up 24 per cent as consumers turned to drinking it at home.
Global distillery Diageo makes Johnnie Walker, Smirnoff and Captain Morgan products among an impressive collection of other notable brands.
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