Focus - Diageo's FY Performance by Region, Brand
Diageo suffered in some emerging market, but its high-end "reserve" brands are performing well
Today, Diageo reported a drop in full-year profits and sales as problems in emerging markets took their toll. Here just-drinks takes a look at the figures for each of the group's regions:
Net sales in the region, on a reported basis, fell by 7% to GBP3.4bn (US$5.7bn), while operating profits slid by 4% to 1.43bn, Diageo said. In US spirits and wines, overall volumes slipped by 1%, while sales fell by 7%. The group's vodka performance was “weak”, it noted as Smirnoff volumes were hit due to its “price premium” being held for another year.
However, strong performers were Bulleit Bourbon, which saw a 63% lift in sales and Diageo's Tequila brand Don Julio, with sales up 22%.
The company's reserve brands saw “double digit” growth fuelled by an around 50% sales rise for Johnnie Walker super and ultra premium variants.
“Economic recovery in the US is uneven and this is reflected in the consumer trends seen in US spirits with overall spirits category growth slowing and premium and above price points driving category growth,” the company said. “Our growth reflects this with Scotch, North American whiskey and Tequila leading the growth.”
Guinness volumes fell by 6% and sales by 8%.
Full-year net sales on a reported basis fell by 2% to GBP2.2bn, the group said. Operating profits in the region, before exceptional items, also slipped by 2% to GBP639m.
In the UK, net sales were up by 2%, helped by a strong performance from Bailey's, rum brand Captain Morgan and vodka Cîroc. Smirnoff sales slipped by 3% as the company blamed a “weak” vodka category, but the brand gained volume share.
In Southern Europe, net sales fell by 3%. Benelux, France and the Nordics saw “modest” growth, while Germany was “weaker”, as the company blamed “an increasingly price competitive off-trade”.
The company said its “reserve” business was strong, with net sales up 15%, driven by Scotch malts, Cîroc, Zacapa and Johnnie Walker.
Overall spirits sales fell by 2%, while volumes were up 1%. Guinness volumes fell 4% on an organic basis, while reported sales fell 2%. Wine volumes slipped 2%, while sales fell by 10%, Diageo said.
Africa, Eastern Europe and Turkey
Net sales in the region, on a reported basis, fell by 9% to GBP2.08bn. Operating profits in the 12 months slipped by 18% to GBP531m.
Nigeria suffered particularly, with overall volumes sliding by 9% and reported net sales falling by 14%. The group admitted beer performance was “weak” in the country as it adjusted prices and boosted its presence in the “growing value segment”. However, spirits and ready-to-drink sales in Nigeria grew double-digit.
In Turkey, volumes fell by 3%, while reported sales decreased by 12%. However, the company said it was a “much improved” second-half performance as organic net sales rose by 5%.
In Russia and Eastern Europe, Diageo saw volumes slip 1%, while reported net sales fell by 7%.
J&B, Smirnoff, Baileys and Guinness all saw volumes and sales slide in the wider region. The one bright spot was Captain Morgan which saw a 3% rise in reported sales off the back of a 16% leap in volumes.
Latin America and Caribbean (LAC)
Net sales on a reported basis slid by 21% to GBP1.14bn. Operating profits fell by 33% on a reported basis by 33% to GBP314m.
Spirits in the region saw volumes slip by 1%, while reported net sales fell by 23%.
Beer volumes were up 10%, while sales fell by 3%, but were up 10% on an organic basis.
In West LAC, the group's biggest market in the region, reported net sales slid by 15% off the back of a 9% drop in volumes, following destocking. Brazil saw a “strong” performance with net sales growth in every category, Diageo said.
Venezuela saw organic net sales grow by 78%, while on a reported basis they fell by 71%. Volumes slid by 17%.
Colombia saw a 7% slip in reported sales, as volumes were up 5%. The group's Mexico business saw reported net sales fall by 10%, while volumes were down 1%.
Net sales on a reported basis fell by 14% in the region to GBP1.35bn, while operating profits dived by 98% to GBP7m.
In Greater China, the group saw reported net sales drop by 33% as volumes fell by 20%. The company said the government's anti-extravagance measures “severely impacted the on-trade channel, and continued to affect performance of both our Chinese white spirits and Scotch businesses”. Sales of baijiu brand Shuijingfang fell by 78% in the 12 months.
In South East Asia, the group's net sales fell by 25% after volumes dropped by 25%. Thailand suffered as “tax increases” and political unrest saw sales down by 24%, Diageo said.
The company saw reported net sales in India up 8% off the back of a 22% volume rise. In Australia reported net sales fell by 17% after a 2% slip in volumes.
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