Game of Thrones 2019 success drags on Johnnie Walker as Diageo H1 sales growth slows - results data

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  • Sales in first half of fiscal-2020 rise 4% to GBP7.20bn (US$9.37bn)
  • North America grows six-month sales by 6%, Africa up 5%
  • Asia Pacific sees sales growth slow, rising 4% versus +13% a year earlier
  • Johnnie Walker posts declines in all regions, except Africa

Diageo has posted a slower sales growth rate for the last six months of 2019, with the Johnnie Walker blended Scotch brand suffering from the 'Game of Thrones' effect.

Diageo Fiscal-2020 - Sales versus 2019 - Reported

Source: Company results

The 4% lift in sales for the first half of Diageo's fiscal-2020 registered at the lower end of the group's September 4%-6% forecast for the full-year. While all reporting regions reported top-line increases, Asia Pacific's 4% increase in the six months represented a marked deceleration on the 13% leap in the corresponding period a year earlier.

In North America, which accounts for 35% of group sales, the company saw the top-line rise by 6% although flagship brand Johnnie Walker fell back 5%. Diageo flagged the tough comparisons of the year prior, when the Game of Thrones-fronted 'White Walker by Johnnie Walker', launched in late-2018, proved lucratively successful in the US. Sales of the broader Scotch portfolio were up in the region, however, by 4%, thanks in part to "buy-in due to tariff uncertainty".

Asia Pacific, which vies with Europe & Turkey to be Diageo's second-largest region (21% of group sales versus Europe's 23%), had a schizophrenic half-year. While Greater China delivered a 24% leap in sales in the period, growth in India was much slower at +2%. The group highlighted the economic downturn in the country, which has led to "a broad-based consumption slowdown". Meanwhile, Travel Retail operations in Asia and the Middle East slumped by 18% as a result of "challenging trading conditions in the Middle East ... and lower passenger traffic including through Hong Kong.

Diageo H1 Fiscal-2020 - Sales by Region - Reported

Source: Company results

In category terms, total Scotch sales were flat as the Black and Red Label expressions of Johnnie Walker softened. Diageo's vodka stable, meanwhile, benefitted from a 1% lift in sales of Smirnoff, which balanced decreasing sales in the US with growth in its other markets.

Elsewhere, Captain Morgan contributed to a 2% lift in total rum sales, while the company's gin roster was up 7% as Tanqueray grew double-digit. Diageo's brewing operations increased their sales by 2%, driven by strong showings for Guinness in the UK, Nigeria and North America.

Diageo H1 2020 - The Headline Brands

Johnnie Walker-4%-5%
Captain Morgan+5%+4%
Scotch - Single Malts+17%+11%
Ketel One-1%+1%
Don Julio+25%+13%

Source: Company results

CEO Ivan Menezes

"Diageo has delivered another good, consistent set of results in the first half, with broad-based organic net sales growth across regions and categories. These results ... are in line with our current mid-term guidance and have been delivered in the face of increased levels of volatility in India, Latin America & Caribbean and Travel Retail.

"For the full year, we, therefore, expect organic net sales growth to be towards the lower end of our 4%-6% mid-term guidance range. 

"There is ongoing uncertainty in the global trade environment and we would not be immune from further policy changes. We remain focused on building the long-term health of our brands, supported by data-led insights and a culture of everyday efficiency."

Diageo will host a media presentation in London later today.

To access Diageo's official half-year results statement, click here.

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