Diageo has reported net sales in the UK up 3% for the six months to 31 December with spirits and beer both in growth.
The company said Baileys was back in growth with net sales up 14% driven by increased in-outlet activation and consumer sampling. Captain Morgan net sales were up 2% with growth driven by the launch of Captain Morgan White. Smirnoff volume was up 1%, however net sales were down driven by higher volume sold on promotion during the holidays.
Beer net sales were up 3% with Guinness net sales up 4%, which Diageo said was driven by strong Rugby World Cup activation and continued success of ‘The Brewers Project’ launches. Reserve brands net sales were up 31% driven by Cîroc, scotch malts and Tanqueray No. TEN.
In Ireland Guinness performance accelerated with net sales up 5%, supported by the continued growth of F15 innovations launched through ‘The Brewers Project’ - Hop House 13 Lager, Dublin and West Indies Porter. Net sales of agency lager brands declined 6% and net sales in spirits were down 6% driven by channel restructuring.
In Europe as a whole, net sales were up 2% while globally they rose 1.8% on an organic basis, off 1% organic volume growth.
Chief executive Ivan Menezes said: “Diageo has become a stronger, more competitive business. We have delivered volume growth, a stronger top line, improved the performance of our key brands, driven cost productivity and continued to generate strong cash flow. While trading conditions remain challenging in some markets, Diageo’s brands, capabilities in marketing and innovation and our route to consumer have proved resilient. I am confident that Diageo can deliver improved, sustained performance.
“For the full year we expect volume growth to drive stronger top line performance, margin to slightly improve and strong cash conversion to continue. This will set us up to deliver better momentum in F17, with productivity gains supporting margin expansion and investment in growth. We remain confident of achieving our objective of mid-single digit top line growth and 100bps of organic operating margin improvement in the three years ending fiscal 19.”
