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Diageo sets goal of 6% alcohol market share

Johnnie Walker owner Diageo is aiming to grow its market value share of the total beverage alcohol category to 6% by 2030.

Diageo portfolio of spirits
Diageo’s portfolio includes Johnnie Walker whisky and Gordon’s gin

Ahead of its biennial Capital Markets Day in London today (16 November), Diageo revealed its ambition to grow its market value share of the total beverage alcohol (TBA) market by 6% in 2030. This is compared to the group’s 4% market share in 2020.

Ivan Menezes, chief executive of Diageo, said: “TBA is a large, growing and attractive sector of which Diageo currently has a 4% value share. With continued investment in marketing, digital capabilities and our people, we have significant headroom for growth. This gives us the confidence that we can grow Diageo’s value share of TBA from 4% in 2020, to 6% by 2030.”

Last year, Diageo unveiled its Society 2030: Spirit of Progress plan, which is committed to reaching zero net carbon emissions by 2030.

In July, the London-headquartered group reported an organic net sales increase of 16% in its 2021 fiscal year, driven by the ‘robust growth’ of its super-premium-and-above portfolio.

Menezes added: “In fiscal 21, despite the challenges created by Covid-19, we delivered strong organic net sales growth, drove an improvement in organic operating margin and delivered strong cash flows, while continuing to invest in long-term sustainable growth.

“We believe our sales growth trajectory has accelerated, underpinned by the strength of our advantaged position across geographies, categories and price tiers.”

New medium-term guidance

The company also issued new guidance for the medium term, with the group expecting an organic net sales growth of between 5% to 7% for fiscal 2023 to fiscal 2025. This is compared to growth of 4% to 6% in fiscal 2017 to fiscal 2019.

Diageo predicts organic operating profit growth of between 6% to 9% for the same period.

Lavanya Chandrashekar, chief financial officer, Diageo, said: “Our focus on everyday efficiency enables us to continue to increase investment in our brands and strategic growth initiatives, while underpinning organic operating margin improvement.

“This self-sustaining growth model gives us confidence that we can accelerate our organic net sales growth within a range of 5% to 7% for fiscal 23 to fiscal 25.

“While we expect inflationary pressures to increase, we also expect to benefit from operating leverage, premiumisation, revenue growth management and productivity gains.”

The group also reported a ‘strong start’ to its 2022 fiscal year.

“We are delivering organic net sales growth across all regions, as we benefit from resilience in the off-trade and continued recovery in the on-trade,” Chandrashekar explained. “This is benefitting organic operating margin, despite rising inflationary pressures, which are partly due to supply chain constraints.”

For the first half of fiscal 2022, the company expects an organic net sales growth of at least 16%.

She continued: “We expect the strong growth momentum in the first half of fiscal 22 to continue through the remainder of the fiscal year. However, in the second half of fiscal 22 we will be lapping a tougher comparator.”

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