Hot Summer Hits Guinness Sales
Published on Jan 30 2014 12:43 PM in General Industry
Net sales of Guinness in Ireland fell by 6% in the six months to the end of December, thanks largely to the hot summer. That's according to figures released today by Diageo.
In relation to the Group's performance in Ireland, excise duty was increased for the second year and was seen to contribute to the 16% net sales decline of the spirits portfolio. However Diageo grew its volume share overall, with an increasing it's share of Smirnoff Vodka and Gordon’s Gin by 2.9% and 1.9% respectively.
On a global scale, the London-based company, whose brands include Guinness and Johnnie Walker whisky, has been impacted by China's crackdown on extravagant gifts to officials and weakness in some other markets, most notably Thailand and Nigeria.
Today the company said that sales rose 1.8% in the six months to the end of December 2013, the first half of the company's financial year, but the rate was slower than the 2.2% registered in the first quarter.
Sales in the Asia-Pacific region fell 6% in the period, hit by baijiu sales in China and economic instability in southeast Asian countries. The company’s sales of beer declined 2.6%, led by Nigeria and Ireland.
Total emerging markets net sales rose 1.3% in the first half while sales in western Europe fell 1%. North American sales rose 4.6%, helping to shore up operating profit, which rose 2.9% to £2.06 billion.
Ivan Menezes, who took over as chief executive from Paul Walsh in the summer, said demand in the United States and better trading in Western Europe enabled Diageo to absorb the challenges in some emerging markets.
He added: "We reacted quickly to the changing emerging market environment, reducing inventory levels in several key markets, which led to a weaker second quarter, and tightly managing our cost base."
The drinks company said it would cut costs by £200 million by 2017.
The profit figures, which were below expectations, sent Diageo’s share price down more than 6% at £17.92 in mid-morning London trading.