New markets thirst raises glasses, Diageo profits

The growing thirst of emerging markets for whiskey, gin and vodka cheered Guinness and Baileys firm Diageo on 23 August as its western markets continued to suffer a debt hangover, Breaking news reported.

The group reported an 11% profits hike in the year to June 30, with spirits fuelling more than 80% of its growth as Johnnie Walker whiskey enjoyed an “exceptional” 15% sales surge, driven by strong demand in countries such as South Africa, Brazil and Asia Pacific.

And Smirnoff enjoyed double-digit growth in Africa and Latin America, helped by a marketing campaign featuring Madonna.

But its performance in western markets was more difficult, with UK net sales down 2% despite strong performances for Smirnoff Red, Guinness and Red Stripe.

Western Europe as a whole saw net sales fall 4% as the debt crisis squeezed people’s spending power, particularly in Spain, Portugal, Greece and Italy.

But with sales in emerging markets up 15% and now accounting for nearly 40% of its sales, Diageo reported an 11% rise in operating profits to £ 3.2 billion (€ 4 billion), while bottom-line profits were up nearly a third.