Diageo full-year sales jump 10.7%

Johnnie Walker owner Diageo has reported double-digit net sales growth for fiscal 2023, driven by its Scotch and Tequila brands.

Diageo recorded net sales increase of 10.7% in the year ending 30 June 2023, bolstered by its premium-plus brands. Reported net sales grew to £17.1 billion (US$21.93bn).

Spirits sales rose by 6% organically, driven by the firm’s two largest spirits segments: Scotch and Tequila.

Scotch sales increased by 12%, led by Johnnie Walker (up 15%). Meanwhile, single malt Scotch also grew by 16%.

Tequila sales grew by 19%, boosted by Don Julio and Casamigos, which rose by 20% and 16% respectively, driven by North America.

Diageo’s vodka portfolio saw declines in North America and Africa that were offset by double-digit gains across all other regions. Its overall net sales grew by 1% with a volume drop of 3%.

Captain Morgan drove the 2% growth of the firm’s rum sales across all regions except North America.

Ready-to-drink (RTD) growth was flat, with positive movement in Europe and Africa offset by a decline in North America, while liqueur sales fell by 1%.

Debra Crew, Diageo CEO, said the results demonstrate the firm’s “ability to consistently deliver resilient performance, even in challenging macro environments”.

“In fiscal 23, we drove double-digit organic net sales growth in Scotch, Tequila, and Guinness, with our premium-plus brands contributing 57% of overall organic net sales growth,” she added.

Crew took on the CEO role in June 2023 following the death of her predecessor, Sir Ivan Menezes, who planned to retire that month.

Global market performance

In North America, reported net sales grew by 11%, driven by a favourable foreign exchange impact from the strengthening US dollar. However, the region’s organic net sales were flat due to a 1% decline in US spirits (offset by growth in Canada and Diageo Beer Company USA).

In Europe, organic net sales rose by 11%. Specifically in Great Britain, spirits sales growth was driven by Tequila, vodka and RTDs, partially offset by gin.

Southern Europe’s 12% growth reflected the continued recovery in the on-trade and increased tourism, alongside market share gains in spirits, while in Northern Europe, sales increased by 11% thanks to double-digit growth for Johnnie Walker, as well as ‘strong growth’ in vodka and Tequila.

Eastern Europe net sales declined by 3%, due to the suspension of exports to and sales in Russia in March 2022, and the winding down of its operations.

In Asia Pacific, all markets grew except Greater China, with strong double-digit growth in India (up 17%), Southeast Asia (up 33%), Travel Retail Asia and Middle East (up 67%) and North Asia (up 15%), leading to an organic net sales growth of 13% for the region.

In Latin America and Caribbean, organic net sales grew by 9%, with most markets delivering growth.

Sales in Africa rose by 5% with growth across all markets, except East Africa, which saw a 2% decline.

Crew said: “We delivered strong growth in four of our five regions, with Europe and Asia Pacific growing by double digits.

“North America delivered [a] stable performance as the US spirits industry continued to normalise post-pandemic, and we lapped strong comparators, particularly in the second half of fiscal 23.

“Globally, we gained or held share in over 70% of total net sales value in our measured markets in fiscal 23.”

Looking ahead 

Going forward, Crew said she expects operating environment challenges to persist, due to “ongoing geopolitical and macroeconomic uncertainty”.

However, with Diageo’s “winning strategy,” she sees “a long runway of growth opportunities” for the firm.

“Fiscal 24 marks the start of Diageo’s next stage of evolution, and it is an incredible privilege to be leading the company through it.”

Diageo completed a number of acquisitions in its latest financial year, including the purchases of Australian coffee liqueur brand Mr Black; Texas single malt whiskey maker Balcones Distilling, and Philippine rum brand Don Papa Rum.

“I firmly believe we have an advantaged portfolio to capitalise on, to drive sustainable long-term growth and generate value for shareholders.”