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Diageo Enjoys Rebound In 2016, As Nearly Every Major Brand Posts Growth In U.S.

July 28, 2016

Diageo’s spirits portfolio enjoyed a strong turnaround in the U.S. market in fiscal 2016, as nearly every major brand in its lineup posted organic sales growth—including an array of brands that lost ground a year ago.

In preliminary results for the 12 months ending June 30, 2016, Smirnoff (net sales up 2%), Captain Morgan (+2%), Johnnie Walker (+7%), Ketel One (+4%), Tanqueray (+7%) and Baileys (+1%) were all on the rise. Each of these brands rebounded from fiscal 2015, when they were in decline. Meanwhile, Buchanan’s (+5%), Crown Royal (+5%), Don Julio (+34%) and Bulleit (+28%) extended their upswings with solid advances. And while Cîroc fell—with sales down 7%—the upscale vodka brand achieved a significant bounce in the second half of Diageo’s fiscal year. Cîroc’s sales for that six-month period jumped by 95%, due largely to the early success of Cîroc Apple. Also on the innovation side, the spirits giant has followed up on the impressive run of Crown Royal Regal Apple with the launch of Crown Royal Honey, a seasonal release aiming to expand the Canadian whisky franchise’s base during the summer.

Overall, Diageo PLC’s net sales rose by 2.8% organically in its recently-completed fiscal year, on volume growth of 1.3%. Each of what the company calls its six “global giants”—Johnnie Walker, Smirnoff, Captain Morgan, Guinness, Baileys and Tanqueray—were on the rise. On a reported basis, Diageo’s net sales were down by 3% to £10.5 billion ($13.8b) as organic growth was more than offset by adverse exchange rate impact and disposals. However, reported operating profit grew by 1.6%, due to the company’s organic growth, lower exceptional operating charges and acquisitions. —Peter Zwiebach

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