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Crown Royal, Bulleit And Don Julio Drive Diageo’s U.S. Sales, As Global Business Accelerates

July 27, 2017

Strong growth in whisk(e)y and Tequila boosted Diageo’s U.S. business in the company’s full fiscal year ended in June. The drinks giant’s core U.S. spirits unit was up 3% on an organic basis for the year, driven by impressive net sales gains for the Crown Royal (+13%), Bulleit (+23%) and Don Julio (+20%) brands. Overall, Diageo’s North America net sales totaled £4.2 billion ($5.5b) for the year, with operating profit up 22% to £1.9 billion ($2.5b).

Crown Royal’s U.S. increase was fueled by the launch of its new Vanilla flavor, as well as ongoing growth for Crown Royal Deluxe and Regal Apple. Scotch whiskies Johnnie Walker (+8%) and Buchanan’s (+7%) likewise delivered solid results during the period, led by Johnnie Walker Black and higher-end marques. The group’s single malt portfolio also contributed, with The Singleton and Lagavulin propelling a 9% increase. Overall, Diageo’s North American whisk(e)y sales surged 12% for the year, while its Scotch labels advanced by a collective 8%.

Diageo noted that it gained share in U.S. spirits across all categories except vodka, where Smirnoff was roughly flat and Cîroc and Ketel One declined by 15% and 6% respectively. Cîroc was hit by decreasing sales for its older flavors, as well as a tough comparison against the launch of its Apple expression in Diageo’s previous fiscal year. Among other key brands, Captain Morgan was up 4% amid a weak rum category, while Tanqueray and Baileys also gained share of their respective categories. In addition to the ongoing rise of Don Julio, Diageo boosted its Tequila presence in recent weeks with the $700 million purchase of Casamigos Tequila.

Globally, Diageo posted a 4% organic sales increase to £12.1 billion ($16b) for the year, as operating profit before exceptional items rose 6% to £3.6 billion ($4.7b). Given the solid results, Diageo’s board approved a share buyback program to return up to £1.5 billion ($2b) to shareholders during its next fiscal year.

Diageo’s international business also made significant progress during the year, with Europe, Russia and Turkey up 5%; Africa up 5%; Latin America and Caribbean growing by 9%; and Asia Pacific rising 3%. —Daniel Marsteller

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