Diageo’s U.S. Spirits Sales Dip 2% In Fiscal First Half; Depletions Slightly Ahead Of Shipments
January 31, 2024Diageo saw its North America business—accounting for 37% of global sales—slip 2% to $4.1 billion in its fiscal first half ended in January, as the company lapped double-digit gains from a year ago across segments including Tequila, whiskey, and RTDs. Operating profit was down 7% to $1.5 billion. The company noted that depletion growth was approximately one percentage point ahead of shipments in the first half—with the business improving sequentially from the previous six months—and that “inventory levels at distributors at the end of the first half of fiscal 24 remained in line with historical levels.”
Diageo’s price/mix in North America was up 1% for the first half, but was offset by a 3% decline in volume, mainly in vodka and rum, where Captain Morgan fell 2%, Ketel One decreased 4%, and Ciroc plummeted 21% as consumers switched to other categories. Those declines offset a 2% increase for Smirnoff, led by its flavor portfolio.
Tequila also fell as a category for Diageo in the first half, even as Don Julio rose 2%, led by its Reposado, but partially offset by some destocking of high-end Don Julio 1942. Casamigos was down 14%, lapping double-digit gains from last year. However, Diageo said both brands’ depletions are significantly ahead of shipments, adding that the “Tequila portfolio continues to grow share of the total U.S. spirits industry, primarily driven by Don Julio.”
It was a mixed performance in whisk(e)y, as Bulleit and Buchanan’s soared, rising 19% and 36% respectively, while Crown Royal, Johnnie Walker, and the single malt portfolio all slipped. Bulleit’s shipments were ahead of depletions as distributors stocked up, while Buchanan’s rise was propelled by its Pineapple flavor extension. Declines in Crown Royal Deluxe and Peach were somewhat offset by strength in flavors like Salted Caramel and Regal Apple, along with higher-end marques.
The prepared cocktail category contributed solid growth for Diageo during the first half, up 33%, led by Ketel One Espresso Martini, Ketel One Cosmopolitan, and Tanqueray Negroni. Diageo Beer Co. USA also fared well, rising 5% on strong growth from Guinness and Smirnoff FMBs.
Globally, Diageo posted sales down 0.6% to $11 billion for the first half, dragged lower by a 33% decline in Latin America, where falling demand forced the company to issue a profit warning late last year. Organic operating profit slipped 5.4% to $3.3 billion. Excluding Latin America, sales would have risen 2.5%.
Diageo CEO Debra Crew says the company is expecting sales to pick up in the second half. “Despite continued global economic volatility, we expect to deliver improvement in organic net sales and organic operating profit growth at the group level, compared to the first half,” she said.—Daniel Marsteller
| Diageo—Top 8 Brands in the U.S. (millions of 9-liter case depletions) |
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| Rank | Brand1 | Origin/Type | 2022 | 2023E | Percent Change2 |
|---|---|---|---|---|---|
| 1 | Smirnoff | Domestic Vodka | 8.8 | 8.7 | -1.0% |
| 2 | Crown Royal | Canadian Whisky | 7.2 | 7.0 | -3.4% |
| 3 | Captain Morgan | Virgin Islands Rum | 5.3 | 5.1 | -5.2% |
| 4 | Ketel One | Imported Vodka | 2.5 | 2.5 | -1.0% |
| 5 | Casamigos | Tequila | 2.4 | 2.5 | 4.0% |
| 6 | Don Julio | Tequila | 2.1 | 2.5 | 18.1% |
| 7 | Johnnie Walker | Scotch Whisky | 2.0 | 1.9 | -3.0% |
| 8 | Bulleit | Bourbon/Rye | 1.7 | 1.8 | 4.5% |
| Total Top 8 Brands3 | 31.9 | 31.8 | -0.5% | ||
| 1 Includes flavors, excludes RTDs. 2 Based on unrounded data. 3 Addition of columns may not agree due to rounding. Source: IMPACT DATABANK © 2024 |
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Tagged : Buchanan's, Bulleit, Captain Morgan, Cîroc, Crown Royal, Diageo, Don Julio, Johnnie Walker, Ketel One, Smirnoff
