US: Spirits demand lower than expected - Diageo chief
Diageo president for North America, Ivan Menezes, has warned that consumer demand for spirits was lower than expected in November and the firm has cut its expectations for December.
Spirits sales are growing slowly but remain depressed in the US, said Menezes during one of Diageo's monthly conference calls for analysts yesterday (15 December).
"November was weaker than we and I think the rest of the industry anticipated," he said, adding that retailers have indicated a disappointing Thanksgiving sales period.
"Given that consumer weakness seems to be common across many sectors, we have lowered our expectations for December," Menezes said.
His comments serve as a reminder that, although the economic situation looks brighter in the US, the country's spirits industry has yet to see concrete improvement.
Menezes said Diageo expects to see "very modest" growth in US spirits volumes in its fiscal half-year, which runs until the end of December. Off-trade volume sales are running between 1% and 2% ahead of last year, but the on-trade remains weak, he said.
During the last year, Diageo has increased its focus on pre-mix cocktails, such as Jose Cuervo Silver and Smirnoff and Captain Morgan varieties, to target a greater number of consumers drinking at home.
Menezes said the group's priority brands have gained market share over rivals.
"Two of the five largest suppliers have really taken down their price mix, anywhere around 2% - that would be Diageo and Pernod," said group chief financial officer Don Berg in a half-year results conference call.
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