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Drinks

Drinks Giant Diageo Sees Full-Year Organic Sales Fall More Than Expected

By Steve Wynne-Jones
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Drinks Giant Diageo Sees Full-Year Organic Sales Fall More Than Expected

Diageo Plc, the world's largest spirits maker, reported a bigger-than-expected decline in underlying net sales, as demand for its whiskeys, vodka and gin fell in all markets except North America.

The Johnnie Walker whisky maker reported an 8.4% drop in organic sales for the year ended June 30, wider than the 7.3% fall analysts had expected, according to company supplied estimates.

Sales Performance

This marks the company's worst annual sales performance in more than a decade, according to Bernstein analysts.

By region, organic sales in Asia declined the most, falling 16% due to the impact of coronavirus-related closures of alcohol outlets and pubs in India and Thailand, while in China the lack of the key Chinese New Year drinking period hit demand.

The company's Latin America, Africa and Europe and Turkey markets also posted double-digit declines in sales, mainly due to disruptions to supply chain and fewer social drinking occasions due to the pandemic.

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North America was the only bright spot, with sales rising 2%, reflecting strong demand for tequilas and ready-to-drink beverages at supermarkets and alcohol stores, the company said.

'Significant Challenges'

"Fiscal 20 was a year of two halves: after good, consistent performance in the first half of fiscal 20, the outbreak of COVID-19 presented significant challenges for our business, impacting the full year performance," commented chief executive Ivan Menezes.

"Through these challenging times we have acted quickly to protect our people and our business, and to support our customers, partners and communities."

The company, which also makes Tanqueray Gin and Smirnoff Vodka as well as a wide range of scotch whiskeys, said it was still unable to provide specific outlook for the year, after abandoning its full-year forecast in April.

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"While the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 21, I am confident in our strategy, the resilience of our business and am very proud of the way our people have responded," Menezes added. "We are well-positioned to emerge stronger."

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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