Diageo’s Sales Jump 20% To $10.7 Billion In Fiscal First HalfJanuary 27, 2022
Diageo saw sales climb 20% organically to £8 billion ($10.7b) in its fiscal first half ended in December, boosted by ongoing strength in the off-premise, a recovery in the on-premise, as well as premiumization and market share gains for both the company and the spirits category as a whole. Organic operating profit leapt 24.7% to £2.7 billion ($3.6b) as productivity savings and price increases more than offset the impact of cost inflation.
“In the off-trade channel, where consumer demand has remained resilient, we have gained or held market share across the majority of our measured markets,” noted Diageo CEO Ivan Menezes. “We also benefitted from the continued recovery of the on-trade channel, particularly in Europe and North America.”
Diageo’s North America sales increased 13% organically to just under £3 billion ($4b) for the six-month period, propelled by the continuing surge in the Tequila category, where Don Julio saw net sales jump 43% and Casamigos surged by 87%. Casamigos surpassed the million-case mark in calendar 2021, according to Impact Databank, joining Don Julio, which had attained that threshold a year earlier. Crown Royal was up 12%, even as supply constraints held down growth of its flavor range, while Johnnie Walker rose 16%, driven by its Blue and Black labels, as well as the debut of its High Rye expression. Bulleit, however, fell victim to a glass shortage that weighed down volumes and fell 19%.
Diageo saw mixed results in the vodka category, with Ketel One (+21%) and Ciroc (+16%) climbing while Smirnoff slipped by 5%. Captain Morgan, down 15%, and Baileys (-19%) saw a tough period, with the latter lapping a difficult comp from the prior year. On the other hand, spirits-based RTDs provided a 50% increase for the company, led by a strong performance by Crown Royal’s premixed offerings.
Overall, organic operating profit in North America rose 6% to just under £1.3 billion ($1.7b), bolstered by a 12% price/mix effect across Diageo’s U.S. spirits business, owing to “strong growth in super-premium plus products, positive channel mix from recovery of the on-trade, and price increases,” according to the company.
Acknowledging the ongoing challenges from the pandemic, supply chain disruptions, and inflation—as well as the tougher comparison base Diageo will face in the second half—Menezes said the group remains well-positioned for solid growth moving forward. “Over the medium-term, from fiscal 23 to fiscal 25, we continue to expect organic net sales to consistently grow within a range of 5% to 7% and organic operating profit to grow sustainably within a range of 6% to 9%,” he concluded.—Daniel Marsteller
|Diageo—Top Five Brands in the U.S.
(millions of 9-liter case depletions)
|2||Crown Royal3||Canadian Whisky||7.3||7.3||0.3%|
|3||Captain Morgan||Virgin Islands Rum||5.6||5.4||-2.7%|
|4||Ketel One||Imported Vodka||2.5||2.6||3.0%|
|5||Johnnie Walker||Scotch Whisky||1.8||1.9||2.4%|
|Total Top Five||26.2||26.0||-0.8%|
|1 Excludes RTDs.
2 Based on unrdounded data.
3 Includes flavored whiskies.
Source: IMPACT DATABANK © 2022