GLOBAL: Developed challenges remain, but Diageo sees Q1 sales rise
- Net sales in Q1 increase by 5%
- Asia Pacific sales in three months to end of September inch up by 2%
- LatAm & Caribbean up by 16%
- Europe slips by 1%
Diageo released its Q1 interim statement earlier today (17 October)
Diageo has posted a lift in net sales for its first quarter, although developed markets remain challenging for the drinks giant.
In a trading update released earlier today (17 October), the company said that organic net sales in the three months to the end of September grew by 5% on a global group basis. However this was a slowdown on last year's Q1, when sales rose by 9%.
Net sales on a reported basis increased by 6% in this year's first quarter, while global volumes were up 2%.
Latin America and the Caribbean delivered the group's biggest growth, with organic net sales up 16%, despite a "tough" prior year comparison. In the US, meanwhile, a "continued good performance" in spirits helped drive up North American sales by 6% year-on-year.
In Africa, "strong growth" in spirits in South Africa and in beer in East Africa offset "weakness" in Nigeria, leading to overall growth of 11% for the division.
The Asia Pacific region saw a sales rise of just 2%. The region's developed markets were dragged down by "weakness" in South Korea. In Asia's emerging markets, strong growth in South-East Asia and China, especially in Scotch, was "offset by the postponement into the second quarter of sales to global travel customers and weakness in the vodka category in India," Diageo said.
Sales in Europe slipped by 1%, but chief executive Paul Walsh said: "While the consumer environment in Western Europe remained challenging, we delivered over 30% net sales growth in the faster growing markets ... especially in Turkey where we have driven share gains from the successful integration of (Turkish spirits company) Mey Içki."
Southern Europe and Ireland are still facing challenges, the group said, while consumer demand in France remains "weak" after duty rises in January.
Overall, Walsh branded the results a "solid" start to the year, with net sales growth in line with expectations.
"As a global business we continue to be aware of the uneven nature of the global economy," he added. "However we remain confident that we will deliver our medium term goals, given the strength of our brands and our routes to market."
Net sales from recent acquisitions Mey Içki, Meta Abo, Ypióca and Shuijingfang, were GBP79m (US$127.7m), while there was a negative foreign exchange impact of GBP49m (US$79.2m), the group said.
By 1100 BST today, Diageo's share price had slipped by 2.1% to GBP17.45.
To read Diageo's official statement, click here.
Reports today claiming that Diageo's public offer to up its stake in United Spirits is doomed to failure should be taken in some sort of context....
In the second part of this analysis of the European Union's review of its strategy to combat alcohol harm across the region, EurActiv details the issues that have to be considered....
The third and final part of EurActiv's analysis of the European Union's alcohol harm reduction strategy focuses on the different positions being taken on different issues in different regions....
Drinks companies stand to benefit as the global travel retail market continues to expand, buoyed by millions of new passengers from developing economies, according to a new just-drinks/IWSR report....
- Whatever happened to binge Britain? - comment
- The dangers of squaring up to your competitor
- How to turn a domestic spirit into a global brand
- The US beer market - A level playing field for all
- Remy Cointreau's Q2 and H1 - preview
- Sidney Frank CEO to head Clooney's import co
- Diageo sells off United Spirits' Bouvet Ladubay
- Captain Morgan distillation trial queried by USVI
- Irish whiskey brands could fail without bulk
- Sazerac sues Brown-Forman over Tennessee Fire
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research
- Future growth opportunities for global spirits
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Global Wine Market to 2019 - Market Size, Development, and Forecasts