Baileys leads Diageo growth as Smirnoff sales fall

By John Harrington

- Last updated on GMT

Related tags Net sales Europe Western europe

Diagoe sales were up in 2013/14
Diagoe sales were up in 2013/14
Diageo has reported a 2% rise in net sales in Britain in the year to 30 June.

Baileys led the growth with sales up 8%, while Smirnoff saw net sales fall 3% despite growing its share of the vodka sector by volume. There was double digit growth for its RTD brands.

The company said the growth of Bailey came on the back of a new advertising campaign and the launch of Chocolat Luxe, which it said was one of the top five spirits sold on Amazon over the week of Christmas.

“Captain Morgan and Cîroc also performed well. Bell’s was weaker as it faced increasingly intense price pressure,” the company said.

Smirnoff net sales declined 3%, “given the weak vodka category” but it gained volume share “supported by the ‘Great Drinks Made Easy with Smirnoff’ campaign and the launch of Smirnoff Gold”.

“Ready to drink was up double digit led by the success of premix, providing popular brands, such as Diageo’s Gordon’s and Pimm’s in more convenient formats.”

Overseas sales

Overall Britain plus France, Benelux and the Nordic countries saw modest growth among Diageo’s Western European arm, which counter-balanced the slowing declines in Southern Europe and Ireland. Germany was weaker due to higher trade investment and an increasingly price competitive off trade.

Organic net sales across Western Europe fell 5%, with net sales declining 2% for spirits, 3% for beer and 10% for wine, although ready-to-drink sales grew 5%. Volumes in Western Europe were flat.

Globally, net sales rose 0.4%, reflecting “growth in North America, stability in Western Europe and weakness in emerging market economies”. Net sales in Q4 accelerated to 0.8%. Full year volumes fell 5%.

Chief executive Ivan Menezes said: “This year our business has faced macroeconomic and market specific challenges that have impacted our top line performance. But we have gained share and expanded margin while continuing to invest in our brands, our markets and our people to create a stronger business that will deliver on the long term growth opportunities of this attractive industry.


“Our regional performance has been mixed. In North America we have again delivered top line growth and significant margin expansion and our Western European business is now stable. Emerging market weakness, often currency related, but also including some specific issues, such as the anti extravagance measures in China, has led to weaker top line growth.

“When I became CEO a year ago I aligned the business behind the key performance drivers which will deliver our strategy. We have made good progress. Reserve has performed strongly; innovation has driven incremental sales in all regions; route to consumer initiatives have been embedded across a number of markets with more to follow in fiscal 15; ruthless focus on driving out cost has driven margin improvement and we have reshaped the organisation and enhanced skills and capability across the whole team at Diageo.

“We have made progress in accelerating the performance of our premium core brands but these brands have been under pressure given the environment this year, although we have delivered share gains in a number of markets.

Tough trading

“The tougher trading environment this year has confirmed my view that these six priorities give the business clarity and focus. We have simplified the organisation, freeing up everyone to act like an owner and sell or help to sell, changing behaviours across the business.

“Therefore we start fiscal 15 as a more agile organisation, building on the changes in behaviours that have been made across the business this year. The catalysts for a near term recovery of consumer spend in the emerging markets are still weak however the future growth drivers for this industry, its aspirational nature as consumers in the emerging markets see increasing disposable income, are undiminished. Diageo has leading brand and market positions and financial strength and our recent acquisitions have given us a strong emerging market footprint.

“The opportunity for Diageo to realise our full potential and deliver our performance ambition remains an exciting one.”

Related topics Spirits & Cocktails

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