Diageo Growth Driven By High-End Spirits, Weighed Down By Beer Sales
After releasing details of its H1 profit growth, Diageo has revealed that off-trade sales of spirits helped drive growth substantially, while on-trade beer-sales tightened its profit margin, TheDrinksBusiness.com reports.
The category that improved most dramatically on a like-for-like basis was that of high-end/premium spirits, which rose in value exponentially during the Christmas period. Haig Club, Cîroc Johnnie and Walker were among the key brands seeing this increase.
John Kennedy, president of Diageo’s European arm, said, "We’ve seen volume and value growth of three per cent – but it is beer in the on-trade that continues to be weak.
"There’s a good trade up element to premium and luxury spirits and these are growing disproportionately in the off-trade – for example single malt grew 40 per cent over Christmas, so that is very positive."
He added, however, that it is difficult to put a price increase on products to drive value sales, citing ongoing price deflation across Diageo's markets.
"There have been customers doing some major resets, but what we find is that total fixture sales actually increase when there’s a focus on a core portfolio," he noted.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Peter Donnelly. To subscribe to ESM: The European Supermarket Magazine, click here.