Diageo posts organic sales growth of 9.4% but sees volume decline in North America

Diageo has reported a rise in half-year net sales of 18.4% to £9.4 billion but indicated that demand for its drinks is slowing in some key markets, including North America.

On an organic basis, net sales grew 9.4% in the first half of fiscal year 2023, reflecting price hikes, premiumisation and organic volume growth of 1.8%. The increase was ahead of analysts’ forecasts of a 7.9% rise, according to Reuters.

While Diageo saw growth across all regions, its North America business, which Reuters says accounts for nearly 30% of overall sales, fell short of analysts’ estimates. Organic growth of 3% was significantly less than the forecast 6% rise. Meanwhile, volume declined 4% on an organic basis, as Diageo lapped strong demand in the year-ago period when consumers drank at home during Covid-19 restrictions.

For the six months to 31 December 2022, Diageo’s operating profit increased 15.2% to £3.16 billion.

The company’s ‘premium-plus’ brands drove 65% of its organic net sales growth.

Ivan Menezes, chief executive of Diageo, commented: “Organic net sales grew 9%, with growth across all regions, organic volume grew 2% and organic operating profit grew 10%. In a challenging cost environment, our organic operating margin increased 9 basis points whilst we also continued to invest for the future.”

He continued: “Sales growth was supported by our continued focus on premiumising our portfolio, bolstered by strong global premiumisation trends, with our super-premium-plus brands growing organic net sales 12%”.