Diageo has recorded an 8.3% increase in full-year net sales, driven by the reopening of bars and restaurants in North America and demand for its premium spirits portfolio.
The owner of Gordon’s gin and Smirnoff vodka has posted full-year net sales of £12.7 billion, representing 16% organic growth – driven by growth across all regions. Overall, net sales of spirits grew 18% with particular strong performance by scotch and tequila.
Diageo benefitted from resilient consumer demand in the off-trade channel, while the on-trade remained restricted in many markets (particularly impacting beer in Europe) and disruption in travel retail continued.
Reported operating profit increased 74.6% to £3.7 billion primarily due to a significant reduction in exceptional operating items compared to fiscal 2020, and 17.7% growth in organic operating profit.
The company’s strong performance was led by its largest market North America, which saw net sales rise 20.2% organically after slow growth of 2% in fiscal 2020. This reflects the easing of lockdowns – driving replenishment of stock at bars and restaurant and higher consumer demand for premium spirits in retail.
In the year ended 30 June, net sales of US spirits went up 24% organically with a particular strong performance by tequila – posting 87% growth thanks to Diageo’s Don Julio and Casamigos brands. Scotch went up by 18%, vodka 8%, Captain Morgan 7% and Baileys 31%.
Diageo Beer Company USA recorded net sales growth of 10% driven by 17% growth in flavoured malt beverages. Despite a strong prior year performance, Canada still posted 4% increase in net sales driven by Baileys and RTDs, which offset a decline in beer.
Organic net sales rose 20% in Africa thanks to resilience in the off-trade market and partial recovery of the on-trade. However, the region saw slower growth in South Africa due to trade restrictions and temporary bans on alcohol sales.
Europe & Turkey posted 4% organic growth primarily driven by Northern Europe, Turkey and Great Britain. Net sales in Latin America and Caribbean went up 30%. Meanwhile, Asia Pacific net sales grew 14%, representing a strong recovery in China and off-trade momentum in most markets.
“I am very pleased with the strong financial results we have delivered in fiscal 21, while continuing to invest in long-term sustainable growth,” said Diageo CEO, Ivan Menezes.
As part of its investment, the company has expanded its gin and ready-to-drink portfolios through acquisitions such as Aviation American Gin and Chase Distillery.
Menezes added: “While our business has recovered strongly in fiscal 21, with net sales growth on a constant basis ahead of fiscal 19 in three of our five regions, we expect near-term volatility in some markets. However, I remain optimistic about the growth prospects for our industry, with spirits continuing to gain share of total beverage alcohol globally and premiumisation trends remaining strong.”
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