Diageo expects organic sales growth to be between 5% and 7% for the financial period 2023 to 2025, compared with 4% to 6% growth during 2017 to 2019, the world's largest spirits maker said as it laid out its medium-term targets.
The Johnnie Walker whisky maker, part of the UK's blue-chip FTSE 100 index, expects organic net sales growth of at least 16% in the first half of fiscal 2022 and organic operating profit growth to be ahead of sales growth.
"While we expect inflationary pressures to increase, we also expect to benefit from operating leverage, premiumisation, revenue growth management and productivity gains," chief financial officer Lavanya Chandrashekar said.
Capital Markets Day
The group made its forecast to coincide with a Capital Markets Day held by the group in London.
It also announced its ambition to achieve a 50% increase in total beverage alcohol (TBA) market share by the end of the decade, from 4% in 2020 to 6% by 2030.
Diageo said that it expects 'strong organic net sales growth' of at least 16% in the first half of its financial year 2022 and organic operating profit growth to come in ahead of organic net sales growth.
Growth Trajectory 'Has Accelerated'
"We believe our sales growth trajectory has accelerated, underpinned by the strength of our advantaged position across geographies, categories and price tiers," said Ivan Menezes, Diageo chief executive.
"TBA is a large, growing and attractive sector of which Diageo currently has a 4% value share. With continued investment in marketing, digital capabilities and our people, we have significant headroom for growth. This gives us the confidence that we can grow Diageo’s value share of TBA from 4% in 2020 to 6% by 2030.”
Commenting on the group's performance, AJ Bell investment director Russ Mould said, “Diageo has declared it is party time as far as its growth ambitions go. Often considered to be a pedestrian company with slow but steady revenue gains each year, Diageo has now announced bold ambitions for a 50% increase in its share of the alcoholic drinks market by 2030.
“Key to achieving this goal is to invest more money in marketing, digital capabilities and staff. Diageo already has a strong reputation for being a dab hand at clever marketing when it comes to Guinness so perhaps it has similar plans to make its other products front of mind for consumers.
“Currently helping Diageo is the fact that people have been eager to get out and socialise following lockdowns. We could have seen a big chunk of the nation decide they no longer wanted to congregate in crowded places, but so far, the signs have been very encouraging for the drinks sector.
“Pubs and bars are filling up again, and nightclubs are also getting back on their feet. This is providing momentum for Diageo’s earnings and what would help next is a removal of more travel restrictions, as that could pave the way for a recovery in duty-free spirits sales.”