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Diageo’s U.S. Sales Rise 5% In Full Fiscal Year

July 25, 2019

Diageo saw net sales increase 6.1% on an organic basis to £12.9 billion ($16.1b) for its full fiscal year ended in June, as volume rose 2.3%. Operating profit jumped 9% organically to £4 billion ($5b), as premiumization and cost efficiencies offset higher marketing investments.

In the U.S., sales within Diageo’s core spirits business were up 5%, led by strong growth for Don Julio (+26%), Ketel One (+10%), Bulleit (+8%), Crown Royal (+6%), and Johnnie Walker (+5%), among others, partially offset by declines for Cîroc (-10%) and Captain Morgan (-4%). Smirnoff, the largest brand in the U.S. spirits market by volume, enjoyed 3% growth as the core brand stabilized and new offering Smirnoff Zero Sugar Infusions performed well out of the gate.

Within the whisk(e)y portfolio, Crown Royal was boosted by the continued growth of its flavored offerings, including Regal Apple, Vanilla, Peach, and Salted Caramel. Johnnie Walker’s progress was driven by its tie-in with HBO’s Game of Thrones, with the company citing the brand’s White Walker expression as bringing new consumers into the franchise. Also in the Scotch category, Buchanan’s saw 4% growth for the year.

Tequila likewise continues to be a growth area, as the Casamigos brand—acquired in a deal worth up to $1 billion in 2017—is rising by double-digits alongside Don Julio. Whereas Don Julio is “significantly upweighting media investment” to drive awareness, Casamigos has been focusing on social media and events on the marketing side, Diageo noted. Diageo North America president Deirdre Mahlan recently said that the blockbuster investment in Casamigos is progressing ahead of schedule, with the brand up 69% to 330,000 cases last year, according to Impact Databank. Don Julio rose 38% to 745,000 cases last year.

Overall, Diageo’s North America region saw sales climb 5% organically to £4.1 billion ($5.1b), with operating profit up 3% to £1.9 billion ($2.4b). Globally, Diageo saw solid sales gains across its business during the fiscal year, with Europe and Turkey up 4%, Africa rising 7%, Latin America and Caribbean up 9%, and Asia Pacific increasing 9%. CEO Ivan Menezes said he expects the company to maintain “organic net sales growth in the mid-single digit range and to grow organic operating profit ahead of net sales in the range of 5%-7%” over the medium term.—Daniel Marsteller

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