Sales up 4% at Diageo UK with gin continuing to boost profits

Net sales grew by 4% in Great Britain, with Diageo gaining share across beer and spirits, in the full year to 30 June 2019.

“Gordon’s and Tanqueray both delivered strong double-digit growth, both benefitting from strong growth of their innovation variants,” it said. While ‘ready to drink’ grew 17% driven by the Gordon’s premix range.

Guinness net sales grew 4%, driven by a strong performance for Guinness Draught and the continued growth of Hop House 13 Lager.

Across Baileys, Smirnoff and Captain Morgan supply chain actions as well as commercial negotiations following recent pricing decisions have resulted in net sales decline, it said.

Net sales for the group were up 5.8%, to £12.9bn, with organic growth partially offset by acquisitions and disposals.

Reported operating profit increased by 9.5% by £4bn, with organic operating profit up 9%, ahead of top line organic growth and driven by improved price/mix.

Within its Europe and Turkey division, 4% net sales growth was achieved, with strong growth in gin continuing.

Beer sales were up 1%, net lager sales growing 5%, driven by Rockshore in Ireland, while Guinness Draught grew 1%.

Scotch net sales were flat as growth in Johnnie Walker and scotch malts was largely offset by the weaker performance of JεB. Baileys was up 2% largely driven by the launch of Baileys Strawberries & Cream in Continental Europe.

While Smirnoff net sales declined 2% driven by Great Britain and Continental Europe, but partially offset by growth in Ireland, said Diageo. Tequila grew double-digit with growth across all markets, and ‘ready to drink’ grew 17% driven by the Gordon’s premix range.

Ivan Menzies, chief executive at Diageo, said the drinks producer had delivered another strong performance across the year.

“Organic volume and net sales growth was broad based across regions and categories, with new product innovation being a strong contributor,” he commented.

“We expanded organic operating margin ahead of our guidance and increased investment behind our brands ahead of organic net sales growth.”