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Diageo toasts jump in sales as Britons turn to Guinness
27 January 2022, 10:44
The company behind Johnnie Walker, Smirnoff and Guinness said it saw strong beer sales in the UK but warned of global cost pressures.
Guinness owner Diageo saw strong sales recover as pubs and bars across the globe started reopening with the easing of Covid restrictions.
Trade was particularly strong in Great Britain, with overall sales up 19%, including a 13% rise in spirits and a more than 30% jump in Guinness sales in the six months to the end of the year compared with the same period in 2020.
Within spirits, vodka was particularly impressive, with sales up 21% driven by Smirnoff. Baileys and rum also grew but sales of gin declined.
Despite the strong growth, Diageo revealed that it is feeling the pinch from growing inflationary pressures, with costs rising and supply chains remaining strained.
Finance chief Lavanya Chandrashekar said the squeeze is being felt across all parts of the business, including shipping, the cost of raw materials, and higher energy bills.
She said: “We are seeing a higher level of inflation at the business than we’ve historically seen.
“Utilities specifically is where we are seeing the maximum increase in inflation, with oil and energy costs being higher.”
Aluminium and cereal costs have also increased, leading to price rises in some categories.
Ms Chandrashekar said: “We don’t do pricing action across the board. We have taken price (rises) in tequila in the US by 4.5%.
“We have taken some price in emerging markets… Nigeria and Turkey we’ve taken several rounds of pricing in these markets. It’s really on a case-by-base basis and it is done selectively in a very disciplined manner.”
Chief executive Ivan Menezes said: “While we expect near-term volatility to remain, including potential impacts from Covid-19, global supply chain constraints and rising cost inflation, I am confident in our ability to successfully navigate these disruptions through the remainder of the year.”
Europe was one of the strongest regions for the global business, with sales in the area up 21%, or £309 million, to £1.75 billion. This also included a partial recovery in duty-free sales at airports as travel restrictions eased.
Beer sales across the continent were up 44%, with Diageo highlighting strong sales of Guinness in Great Britain and Ireland.
Tequila was the fastest-growing drink for the business, with sales up 56% as its Don Julio and Casamigos brands enjoyed rising popularity
There was also a 27% jump in whisky sales, including a 31% rise for Johnnie Walker.
Overall, revenues grew 12.6% to £11.8 billion and pre-tax profits rose 24% to £2.7 billion.