Spirits maker Diageo reported higher-than-expected full-year operating profit and sales on Tuesday as higher prices and customers treating themselves to more expensive liquor brands helped offset falling volumes.
The world's largest spirits maker, which also makes Johnnie Walker whisky, Captain Morgan's rum and Ketel One vodka, said organic net sales rose 6.5% in the year to June 30, marginally beating analyst forecasts for a 6.4% increase, according to a company-provided consensus.
"We drove double-digit organic net sales growth in scotch, tequila, and Guinness, with our premium-plus brands contributing 57% of overall organic net sales growth," Diageo's new CEO Debra Crew said in a statement.
She was appointed CEO in June after adding the death of long-time boss Ivan Menezes.
Diageo said its organic net sales increase reflected 7.3 percentage points of gains from higher prices and a more premium mix and a decline in organic sales volumes of 0.8%.
Organic operating profit rose 7%, more than the 6.3% expected by analysts.
Diageo tapped a new consumer base of amateur cocktail-makers during the COVID-19 pandemic that has since driven at-home sales. Households began trading up to more expensive types of alcohol, investing along the way in premium brands such as Bulleit Bourbon and Don Julio tequila.
Once lockdowns ended, many people stuck these brands, continuing to buy them in bars and restaurants as treats despite their big price tags.
Looking to the 2024 fiscal year, Crew said, "I expect operating environment challenges to persist, with continued cost pressure and ongoing geopolitical and macroeconomic uncertainty."