Diageo sales rise in UK as drinkers embrace spirits during pandemic

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Guinness maker Diageo has cheered a leap in sales on the back of recovering consumer demand as its British business was boosted by strong retail spirit sales.

The company, which also makes Gordon’s gin and Smirnoff vodka, revealed that net sales rose by 16 per cent to 12.7 billion pounds (17.73 billion dollars) for the year to June, surpassing analyst
expectations.

It added that underlying operating profits jumped by 18 per cent to 3.7 billion pounds. The group faced significant disruption over the year due to the pandemic with bars closing for large periods across many regions.

Bosses warned that they still expect “near-term volatility” in some markets, but they are broadly positive about the recovery of the sector.

The group’s annual performance was boosted by a strong recovery in North America as US bars and restaurants reopened, sparking a jump in tequila and scotch sales.

Net sales increased by a fifth in North America as it also hailed a 10 per cent rise in beer sales.

In its Europe and Turkey business, net sales grew by 4 per cent as it was lifted by retail sales with strong supermarket sales largely offsetting the impact of hospitality closures.

Its British operation reported 7-per-cent sales growth on the back of “strong consumer demand” in retail while online sales were also lifted during the pandemic.

The firm said British spirit sales grew 16 per cent as shoppers bought more scotch, Baileys, vodka and gin, with boosts from new product line such as Gordon’s Sicilian Lemon and Captain Morgan Tiki rum.

However, beer sales slumped by 16 per cent due to the “significant impact” of enforced hospitality closures in the UK. Ivan Menezes, chief executive of Diageo, said: “We were well-positioned to
successfully manage the challenges created by Covid-19, we have responded quickly to changing consumer trends and we have emerged stronger.

“While our business has recovered strongly in fiscal 2021, with net sales growth on a constant basis ahead of fiscal 2019 in three of our five regions, we expect near-term volatility in some markets.

“However, I remain optimistic about the growth prospects for our industry, with spirits continuing to gain share of total beverage alcohol globally and premiumization trends remaining strong.

“I believe Diageo is very well positioned to capture these exciting

opportunities to drive long-term sustainable growth and shareholder value.”

Elsewhere in the drinks sector, the world’s largest brewer, AB InBev, revealed a 27.6 per cent increase in total revenues for the past three months.

The Budweiser owner delivered a 1.5-billion-dollar operating
profit as it continued to be impacted by pandemic disruption.

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