Diageo recorded a 21.4% increase in full-year revenue, driven by strong organic net revenue growth across all regions.
In the financial year to June 30, the owner of Smirnoff vodka recorded full-year net sales of £15.5 billion. Overall, spirits net sales were up 21%, with particularly strong performance from scotch, tequila, vodka, gin and Chinese white spirits.
Reported operating profit increased by 18.2% to £4.41 billion, driven by strong organic operating profit growth of 26.3%, partially offset by the negative impact of non-cash impairments linked to India and Russia.
In North America, Diageo recorded a 17% increase in sales, driven by the performance of American spirits and the favorable effects of exchange rates and acquisitions.
Driven by tequila, net sales of US spirits increased by 19%, reflecting the recovery of the on-trade channel and the resilience of consumer demand in the off-trade channel, as well as market share gains.
On an organic basis, tequila sales increased 57%, Scotch’s sales increased 19% and vodka sales increased 1%. However, the company saw an 8% drop in Baileys sales, while Captain Morgan sales fell 6% as the rum category continued to lose spirits market share. Meanwhile, Diageo Beer Company recorded organic net sales growth of 2%.
Elsewhere, Diageo reported a 19% increase in net sales in Africa; 26% growth in Europe; 16% in Asia-Pacific; and 46% in the company’s Latin America and Caribbean region.
Ivan Menezes, CEO of Diageo, said: “We achieved double-digit organic net sales growth in all regions and gained or held non-trade market share in over 85% of the total value of our net sales in the measured markets. We grew operating margin while increasing marketing investments ahead of net sales growth, and we used our strong cash generation to invest in long-term growth.
He continued, “In a year of significant global supply chain disruption, our double-digit volume growth demonstrates the incredible agility and ingenuity of our teams. Our net sales growth was spread across all categories. We benefited from the recovery of the hospitality sector, the continuation of global premiumisation trends, with our super-premium-plus brands up 31%, and price increases in our regions. I am particularly proud of the performance of Johnnie Walker, which recorded double-digit growth across all regions to exceed 21 million cases globally. This fantastic milestone exemplifies our world-class brand building and execution capabilities. »
“Looking ahead to fiscal 2023, we expect the operating environment to be challenging, with continued volatility related to Covid-19, significant cost inflation, potential weakening of consumer purchasing power and global geopolitical and macroeconomic uncertainty. These factors notwithstanding, I am confident in the resilience of our business and our ability to weather these headwinds. »