Diageo’s Sales Rise 9% To $11.6 Billion In Fiscal First Half
January 26, 2023Diageo saw net sales increase 9% on an organic basis to approximately $11.6 billion during its fiscal first half ended in December, as organic operating profit rose 9.7% to just under $4 billion. Premium-plus brands contributed 57% of reported net sales and drove 65% of organic net sales growth, with the company seeing global gains across most categories, led by Scotch, Tequila, and beer.
Diageo’s North America region, accounting for 37% of global sales, posted a 3% organic net sales rise, as strong price/mix growth offset a 4% decline in volume. The core U.S. spirits business was up 2% organically. The sales growth was propelled by Tequila, which grew 24%, as well as double-digit growth in American whiskey and spirit-based RTDs, while vodka, Canadian whisky, and Scotch declined. According to Impact Databank, Diageo now has two upscale Tequila brands above 2 million cases in the U.S. in Casamigos and Don Julio, both of which are also above the billion-dollar mark in terms of retail sales value.
In the U.S., “the recovery in the on-trade channel, resilient consumer demand in the off-trade channel and the partial easing of supply chain constraints on certain products resulted in the replenishment of stock levels by distributors and retailers towards normalized levels on several brands,” Diageo noted. “The impact of lapping this replenishment resulted in depletions being significantly ahead of shipments across some brands in the first half of fiscal 23.”
Among Diageo’s key brands in the U.S., Casamigos and Don Julio saw net sales grow 28% and 20% respectively, while Bulleit jumped 19%, single malt Scotches led by Lagavulin increased 61%, and the spirit-based RTD segment rose 12%. Smirnoff also fared well, rising 7%, although a decline in Ketel One Botanical led to the Ketel One brand falling 14%. Crown Royal (-9%), Baileys (-4%), Johnnie Walker (-10%), and Buchanan’s (-12%) were also down, while Captain Morgan was flat.
Commenting on the results, Diageo CEO Ivan Menezes said, “Sales growth was supported by our continued focus on premiumizing our portfolio, bolstered by strong global premiumization trends, with our super-premium-plus brands growing organic net sales 12%. As category growth trends continue to normalize following Covid-19, winning quality market share remains a key focus. I am pleased to say that we gained or held share in 75% of total net sales value in our measured markets.” He added that Diageo is now 36% larger than it was pre-Covid.
Looking ahead, Diageo says it remains well-positioned to post organic net sales growth in the range of 5% to 7% and organic operating profit growth in the range of 6% to 9% for fiscal 2023 (ending in June) to fiscal 2025.—Daniel Marsteller
| Diageo—Key Brands in the U.S. (millions of 9-liter case depletions) |
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| Rank | Brand1 | Origin/Type | 2021 | 2022E | Percent Change2 |
|---|---|---|---|---|---|
| 1 | Smirnoff | Domestic Vodka | 8.9 | 8.7 | -2.5% |
| 2 | Crown Royal | Canadian Whisky | 7.5 | 7.4 | -1.4% |
| 3 | Captain Morgan | Virgin Islands Rum | 5.4 | 5.3 | -2.9% |
| 4 | Ketel One | Imported Vodka | 2.6 | 2.6 | -1.7% |
| 5 | Casamigos | Tequila | 1.9 | 2.3 | 21.6% |
| 6 | Don Julio | Tequila | 2.0 | 2.1 | 9.0% |
| 7 | Johnnie Walker | Scotch Whisky | 2.0 | 2.0 | -1.6% |
| Total Key Brands3 | 30.2 | 30.2 | 0.0% | ||
| 1 Includes flavors, excludes RTDs. 2 Based on unrdounded data. 3 Addition of columns may not agree due to rounding. Source: IMPACT DATABANK © 2023 |
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Tagged : Casamigos, Crown Royal, Diageo, Smirnoff
