Diageo North America Sales Jumped 19% in 1st Half as Volume Slipped 4%

Diageo North America reported net sales grew 19% even as volume slipped 4%.  Organic net sales grew 3%.  

Globally, Diageo reported net sales of GBP9.4 billion (roughly $11.64 billion), an 18.4% gain that primarily reflected strong organic net sales growth as well as favorable impacts from the strengthening U.S. dollar. Profit was GBP 2.295 billion (roughly $2.84 billion), up 16.7% from a year earlier.

Tequila Key to North America Results

North America's positive sales growth depended upon tequila, whose net sales grew 24%, gaining share of both the spirits market and the tequila category.  Crown Royal net sales declined 9%. With supply constraints on flavored variants lifted in the first half of fiscal 22, the brand is improving, the company said.

Vodka net sales declined 15%. Smirnoff grew 7%, but Ketel One net sales fell 14%, and Ciroc net sales plunged 46% as distributors adjusted inventory levels, a response to multicultural consumers being recruited into other spirits categories.

Scotch net sales eased 5%.  Johnnie Walker net sales declined 10% but gained share of the scotch category.  Buchanan's fell 12%.  Single malts net sales were up 61%.

Captain Morgan net sales were flat, Baileys net sales declined 4%, Bulleit whiskey net sales jumped 19% as the brand gain share in both the spirits market and the U.S. whiskey category.  

Spirit-based ready to drink grew 19%.  

Menezes: Strong Start Globally

Reflecting upon the global results, Ivan Menezes, CEO, said Diageo has "made a strong start to fiscal 23. Organic net sales grew 9%, with growth across all regions, organic volume grew 2%, and organic operating profit grew 10%. In a challenging cost environment, our organic operating margin increased 9 basis points whilst we also continued to invest for the future.

"Today, Diageo is 36% larger than it was prior to Covid-19, reflecting the strength of our diversified footprint and advantaged portfolio. I want to thank my nearly 28,000 colleagues for their tireless work, focus and agility which has helped us to achieve these results.

"Sales growth was supported by our continued focus on premiumizing our portfolio, bolstered by strong global premiumization trends, with our super-premium-plus brands growing organic net sales 12%. As category growth trends continue to normalize following Covid-19, winning quality market share remains a key focus. I am pleased to say that we gained or held share in 75%⁽²⁾ of total net sales value in our measured markets, demonstrating our strong commercial execution.

"We have delivered targeted price increases across all regions, enabled by our expertise in revenue growth management and supported by strong consumer demand for our brands. This, combined with our culture of everyday efficiency, has allowed us to increase our investments. We are investing in world-class brand building, digital and data capabilities and our ambitious 2030 sustainability plan to create a stronger and more resilient business for the long-term," he said.