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Diageo NA Sales Up 6% In Year To Date, Led By U.S. Spirits

April 18, 2013

Diageo CEO Paul Walsh said a continued “strong performance from our biggest business, U.S. spirits,” helped keep up the drinks giant’s momentum in the nine months through March, representing the first three quarters of its fiscal year. Diageo said underlying consumer trends remained unchanged in the U.S. from when it reported its first-half results earlier this year. Its North American unit enjoyed 6% net sales growth over the last three quarters, with price increases taken in its core U.S. spirits business beginning in May 2012 contributing to good premiumization trends during the period.

Globally, Diageo posted 5% organic net sales growth in the last nine months, with volume up 1%. In addition to North America, Diageo’s Asia Pacific (+4%); Africa, Eastern Europe and Turkey (+9%); and Latin America and Caribbean (+14%) regions all saw net sales increase during the period, while Western Europe (-4%) declined. By brand, the company touted the recent performances of Johnnie Walker, Crown Royal, Buchanan’s and Tanqueray, all of which were up double-digits in the third quarter.

In related news, Diageo’s Latin America and Caribbean president Randy Millian will be replaced by Alberto Gavazzi, currently managing director West Latin America and Caribbean, effective July 1. Gavazzi will report to Diageo COO Ivan Menezes. Millian will retire from Diageo by the end of June 2014. In the meantime he will take on a non-executive role of chairman of Latin America and Caribbean, also reporting to Menezes, to ensure a smooth transition.

Meanwhile, analysts believe Diageo is unlikely to attain the 53.4% stake in India’s United Spirits Ltd (USL) it had hoped for through its current open offer for shares of the company, because USL’s stock price has risen markedly since Diageo announced its R1,440 ($26.66) a share offer last year. Still, Diageo has said its existing 27.4% holding of USL, and its corresponding voting and management rights, should allow it to effectively control the company even without a majority stake.

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