Diageo's H1 Performance by Region - Focus
Diageo's Ciroc vodka ran into shipment issues in H1
Today, Diageo reported a lift in H1 net profits but net sales fell. Here just-drinks takes a look at the performance of the group's regions in the first half:
Volumes -2%, organic sales -2%, organic operating profits -2%
Ciroc organic sales fell 43% in the first half after the launch of Ciroc Pineapple last year. Diageo may have learned a lesson from the launch of the pineapple extension, when it shipped 750,000 cases. For the launch of Ciroc Apple this year it only shipped 250,000 cases.
Diageo's global brands were strong, with Smirnoff rebounding (+4% organic sales) after a tough few years. Captain Morgan also showed organic sales growth (+1%) while Johnnie Walker was flat. North American whiskey Bulleit benefited from increased demand for the category, up 27% in organic sales. Crown Royal performed strongly as a result of the continued success of Crown Royal Regal Apple, which an analyst this week identified as driving the Canadian whiskey brands performance.
North American Performance
|Organic volume movement %||Organic net sales movement %|
|Ketel One vodka||(1)||(2)|
(i) Spirits brands excluding ready to drink.
Europe, Russia and Turkey
Volumes +2%, organic sales +3%, organic operating profits +5%
Europe saw growth with continued success in the UK and an improved performance in France. In Russia price increases to offset devaluation led to a volume decline of 12%, however net sales grew 20% driven by positive brand mix. In Turkey net sales were up 9% driven by premiumisation in the raki category and double-digit growth for Johnnie Walker and Smirnoff.
Volumes +7%, organic sales +3%, organic operating profits flat
Volumes and sales were up as beer sales jumped by 15%. Performance was led by the roll back of excise duty increase on Senator in Kenya, growth in Guinness and Malta Guinness in Nigeria, and good performance in the growing value beer segment with Satzenbrau in Nigeria, and Balozi and Allsopps in Kenya, Diageo said.
Latin America and Caribbean
Volumes +4%, organic sales +9%, organic operating profits +5%
Solid growth was found in the region despite difficult market conditions, Diageo said. Brazil net sales were up 12% reflecting price increases and positive shipment phasing ahead of a December duty increase. Performance in both Mexico and Colombia was strong with net sales up 20% and 24% respectively, driven by Scotch and the introduction of Baileys flavours, Diageo said.
Volumes flat, organic sales +2%, organic operating profits +18%
Volumes were flat but sales and operating profits were up. The performance of Shui Jing Fang drove growth in Greater China and the successful renovation of Royal Challenge drove top line growth in India, Diageo said. There was "weakness" in Korea, driven by a shift towards lower abv spirits, and in Global Travel Asia and Middle East, given geopolitical developments, according to the company. The reserve portfolio continued to deliver a strong performance, up 15%, with growth coming from Master Distiller's No. 8 brand in Greater China and the reintroduction of Johnnie Walker Green Label in Australia.
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