Diageo Sees Strong Start To Fiscal Year, Boosted By U.S. Resilience

In a trading update this morning, Diageo said a strong performance in the U.S. market has propelled a good start to its 2021 fiscal year, which ends next June. “Our U.S. business is performing strongly and ahead of our expectations, reflecting resilient consumer demand and the spirits category continuing to gain share within the total beverage alcohol market,” said CEO Ivan Menezes, adding that increased restocking in the off-trade and the gradual reopening of the on-trade are contributing to momentum.

In Europe, Menezes noted, “off-trade demand remains robust and the on-trade channel has largely re-opened with the easing of lockdown measures in most countries, although the risk of additional restrictions remains where infection rates are worsening.” China is also seeing improvement, with recovery in the on-premise, despite the slower return of large-scale banqueting occasions.

In its fiscal year ended in June, the drinks giant’s full-year sales slipped 8% overall to £11.8 billion ($15.3b), and operating profit declined 14% to £3.5 billion ($4.6b), despite a 2% increase in its core U.S. spirits business. Diageo North America came under new leadership July 1, with board member Debra Crew replacing the retiring Deirdre Mahlan as president. Moving forward, Menezes said the company expects “sequential improvement in organic net sales and operating profit compared to the second half of fiscal 20.”—Daniel Marsteller

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