Diageo's gin sales up but mixed picture for Scotch whisky

Anyone with a passing acquaintance with fashions in the drinks industry will be aware that, just now, gin is where the real excitement is.
That was certainly borne out in today's results from Diageo, the world's leading spirits company, covering the year to the end of June.
Gin was the stand-out category, with sales up 16% on the previous 12 months, with sales of Tanqueray, the company's big global brand, up by 15%.Ivan Menezes, the chief executive, said that, while most of this growth came from Europe, gin sales also grew strongly in countries not previously known for their love of gin, including Brazil, Mexico and South Africa.He added: "Tanqueray continues to be the bartenders' gin of choice."Also growing strongly was Gordon's Premium Pink gin, described by Mr Menezes as "the number one spirits innovation in the last decade", which took just 10 weeks to get onto the shelves once the decision was made to launch it.For all the excitement over gin, though, it remains a relatively small part of Diageo's business and accounts for just 4% of global sales.Scotch whisky remains at the heart of this company.Fully a quarter of Diageo's €12.1bn worth of sales comes from the spirit but, here, the picture was somewhat mixed.Sales of Johnnie Walker, probably Diageo's single most important brand, were up 5% worldwide but, overall, Scotch sales were up just 2% thanks to a drop-off in sales in Africa and weak sales of J&B in Spain.Strikingly, Mr Menezes thinks Johnnie Walker could be growing even more strongly, noting that sales of Johnnie Walker Black were up by 9% and the premium Johnnie Walker Blue were up by more than 10%.The company is investing €150m on upgrading its Scotch whisky visitor experiences, which will include a state-of-the-art Johnnie Walker immersive visitor experience in Edinburgh, while separately it is also bringing back to life 'Ghost' distilleries that were closed long ago as it seeks to meet the world's growing appetite for Scotch.The two themes have been married this year with the launch of Johnnie Walker Blue Label Ghost & Rare - a limited edition that contains whiskies produced from stills no longer in production.It may not be a bottle you see on the shelf of your local Tesco Express or Sainsbury's Local, though, as it typically sells for around €220 a bottle.Elsewhere, sales of tequila, where Diageo owns the Don Julio brand, were up by 40%, while US whisky - the key brand here is Bullitt - were up by 7%.It all meant that, at a headline level, Diageo raised global operating profits by 8%, to €3.82bn, during the course of the year.
Diageo's gin sales up but mixed picture for Scotch whisky

Diageo's scotch sales were up just 2% after weaker sales in Africa
Pre-tax profits were up by 7% to €3.7bn.This has enabled Mr Menezes to raise the dividend by 5% and the company is also buying back a further €2.5bn worth of its shares this year.If there was a blemish on these results, it is that sales of vodka slipped by 1%, the only category in which Diageo is not growing.Sales of Smirnoff, its key vodka brand, were down by twice that amount but Mr Menezes insists it is not a case of consumers falling out of love with the drink.He points out that Diageo's vodka sales rose everywhere outside North America where, thanks to the launch of hundreds of new individual brands, competition is fierce.He said recent innovations, such as a Botanicals version of the premium Ketel One brand, were starting to pay off.And innovation is something Diageo has proved, time and again, that it can achieve even with its established brands.The launch of Gordon's Premium Pink is one example but another is the way new life has been breathed into Guinness.
Diageo's gin sales up but mixed picture for Scotch whisky

Diageo breathed new life into its Guinness brand and saw a 5% sales rise in the year
Only a few years ago, the stout was seen as a tired brand, with sales dropping by 5% in 2013-14.However, after several years of heavy investment and promotion, it is on the up.The brand has been extended into IPA and Pilsner beers and, in particular, the Guinness Hop House 13 Lager brand has been launched.Accordingly, sales of Guinness actually rose by 5% this year.
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It would be unwise to bet that the company cannot pull off a similar trick with Smirnoff.Diageo chief executive Ivan Menezes is a guest on Ian King Live at 6.30pm on Sky News this evening
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