This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
News
Diageo predicts ‘strong growth’ in North America
Ivan Menezes, CEO of Diageo, is “pleased” with the group’s 2% organic net sales decline in North America, but claims the second half of its financial year will show “strong growth”.
Diageo’s CEO Ivan Menezes claims the group will deliver a “stronger performance” in H2
In the first six months of fiscal 2015/16, Diageo saw its key North American market decline in terms of both sales and volumes, blaming a 43% organic net sales decline for Cîroc vodka in the market.
Cîroc, which saw total global sales fall 37% in the time period, in particular impacted the group’s performance in the United States.
Diageo said the super-premium grape-based vodka had been negatively affected by a new “replenishment model on innovations” in the US, which reduced shipments.
In addition, Cîroc’s latest flavour innovation, Cîroc Apple, was released at a later date in H1 2015/16 compared to Cîric Pineapple in H1 2014/15.
Nevertheless, speaking to journalists last week, CEO Ivan Menezes said he was “pleased” with the group’s performance in North America and the US, which he said was “in line with expectation”.
He said: “ We have a tale of two halves (in North America). As we changed our innovation replenishment model, we expected H1 to be down, but H2 will be in strong growth. I feel very good about what we are doing with Smirnoff and Captain Morgan. We are doing a lot more with brand activation.
“We have changed the innovation model to be closer to the market. We have just launched Cîroc Apple and have a supply chain that can replenish it much quicker.”
After suffering steady declines in recent years, Diageo said Smirnoff Vodka is “starting to stabilise” with North American sales up 2%. The brand is also poised to benefit from the launch of a new range that contains real fruit juice in the third quarter.
Meanwhile, Captain Morgan grew 1% in the market following the launch of Captain Morgan Cannon Blast, which targets the Millennial short market.
“We feel very good about the momentum in this first half and the outlook for the company,” added Menezes. “The second half will do better than the first half. We feel this company is well positioned.”
Overall, Diageo reported a net sales decline of 5% to £5.6bn in the first half of its financial year and a profit decline of 3% to £1.7bn.