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Diageo reveals strong start to fiscal 2023

Smirnoff owner Diageo has reported net sales growth across all regions for the start of its 2023 fiscal year, according to a new trading update.

Diageo Smirnoff
Diageo owns the world’s biggest-selling vodka brand, Smirnoff

Diageo, owner of Johnnie Walker Scotch whisky and Smirnoff vodka, issued a trading statement ahead of its annual general meeting today (6 October).

Diageo’s CEO Ivan Menezes reported a “good start” to the next fiscal year, with growth across all regions as a result of its “advantaged portfolio”, “continued investment in brand building” and its “agile supply chain and culture”.

However, he noted: “We expect the operating environment to remain challenging with ongoing volatility due to geopolitical uncertainty, a weakening of consumer spending power, inflationary pressures and disruption related to Covid-19.”

Despite the challenges, Menezes expressed his confidence in the “resilience of the business” and its “ability to navigate these headwinds while executing strategic priorities”, including the firm’s 2030 sustainability plan.

The CEO said the company remained “well positioned” to meet its medium-term guidance for fiscal 2023 to fiscal 2025, with organic net sales predicted to grow by between 5% and 7%, and organic operating profit expected to rise “sustainably” in the range of 6% to 9%.

Diageo posted double-digit growth in its 2022 fiscal year, with premium-plus brands contributing 57% of reported net sales, with an organic net sales growth of 71%.

In August, Menezes said he has confidence the firm’s growth in the affordable luxury sector will continue through an upcoming recession.

The company recently acquired Australian coffee liqueur Mr Black, and pulled out of its US$163 million deal to sell blended Scotch brand Windsor to a private South Korean equity group.

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