The US accounts for 45% of Diageos group profits

The US accounts for 45% of Diageo's group profits

Diageo's reliance on the US spirits market is less a concern and more a benefit, the company's CEO has told just-drinks.

On its own, the US accounts for just under 50% of the group's total profits. In half-year results, released yesterday, Diageo's North America division reported a 2% decline in sales by value and by volume, with spirits and wines in the US falling by 3% in value terms and by 2% in volumes.

Speaking exclusively to just-drinks yesterday, however, Ivan Menezes argued that he was not concerned that Diageo's biggest market is responsible for such a large share of its bottom line. "I'd turn that around and say that I'm delighted that 45% of our profits come from the US," he said.

"When you look around the world, the US is by far the most attractive spirits market in the world, both in terms of profitability – it is unbelievably profitable - and in terms of growth trajectory. The market offers reliable, steady growth," he added. "We've referred to the US in the past as being our best developing market. The demographics are good, the population is growing, the multi-cultural shifts are very positive for spirits and the Millennial group is strong."

Menezes also said that the spirits segment is growing faster than beer or wine in the US, and that new consumers, between LDA and 24, are "drinking more spirits than the previous generation".

"Diageo's leadership position in the US is one of our great strengths," Menezes continued. "In the next decade, it's going to be reliable in terms of a steady growth trajectory. In our first-half results, we delivered exactly what we expected to deliver in the country. In the second half, I'm confident that we're going to have strong growth in the US."

The country's lack of economic and political volatility served in its favour for Diageo, with Menezes describing the market as "a real bedrock" for the group. "If I have one incremental dollar to invest," he said, "the first place I look at is the US."

At the company's Capital Markets Day, held in the US late last year, the new head of North America for Diageo, Deirdre Mahlan, admitted that the company had failed to keep pace with spirits growth in the country. "We've not been getting our fair share of the growth," Mahlan said at the time.

The time is nigh for the US to deliver for Menezes - Click here for a just-drinks analysis