Casamigos sales down 20% in Diageo FY sales

Sales of Casamigos Tequila fell by 20% in Diageo’s full-year results, which were flat overall due to the Latin American and Caribbean region.

Smirnoff owner Diageo reported flat organic net sales for the year ending 30 June 2024, driven by a double-digit drop in the Latin American and Caribbean (LAC) region.

The London-headquartered firm reported a 0.6% dip to US$20.269 billion, with sales in LAC plunging by 21.1%. Organic operating profit for the year decreased by 4.8% to US$6bn, led by LAC and North American declines.

The company attributed the decline in LAC to a ‘weaker consumer environment’ and a reduction in inventory levels to ‘more appropriate levels’.

Diageo also noted that Mexico was a challenging market (down by 30%) due to the ‘highly competitive environment and consumer downtrading’ with drinkers moving to local spirits. Diageo said its market share in Mexico declined in fiscal 2024, particularly in Tequila and Scotch.

Spirits sales in LAC, which represents 9% of the group’s revenue in fiscal 2024, plunged by 23%. The group said this was primarily driven by Scotch, particularly Buchanan’s, Johnnie Walker Black Label and its Red Label expression, as well as a ‘strong double-digit decline’ for Don Julio in Mexico.

Diageo’s sales in LAC saw a drastic 23% drop in the first half of fiscal 2024.

It’s a stark contrast to Diageo’s previous financial year when sales soared by 10.7%.

Excluding the LAC region, Diageo noted a 1.8% organic net sales increase for fiscal 2024 and a 0.1% dip in organic operating profit.

Debra Crew, chief executive of Diageo, said: “While fiscal ‘24 was a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility, we focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves.

“Fiscal 24 was impacted by materially weaker performance in LAC. Excluding LAC, organic net sales grew 1.8%, driven by resilient growth in our Africa, Asia Pacific and Europe regions. This offset the decline in North America, which was attributable to a cautious consumer environment and the impact of lapping inventory replenishment in the prior year.”

Geographically, North America (the group’s biggest market with 39% of sales) was the only other region (besides LAC) to decline organically, falling by 3%. Europe (24% of Diageo’s total sales) saw growth of 3%, led by Great Britain (up 5%) and Turkey (up 31%), while Asia Pacific (representing 19% of total sales) rose by 4%.

Africa (which contributes 9% of Diageo’s total sales) performed well, rising by 12%.

Within the US, spirits sales declined by 3% with Tequila falling by 5% due to Casamigos (down by 22%) and Johnnie Walker dropping by 10%. Spirits-based ready-to-drink (RTD) cocktails rose by 15% in the States.

Key spirits categories decline

In terms of categories, most spirits segments were in decline, apart from liqueurs (up 2%), Indian-made foreign liquor (up 10%), Chinese white spirits (up 27%) and US whiskey (up 3%). Among the brands in these categories, Baileys was up by 1%, Indian whisky McDowell’s increased by 3%, Shui Jing Fang baijiu soared by 27%, and Bulleit whiskey posted an 11% uptick.

Scotch sales declined by 10% with Johnnie Walker reporting a 6% drop and single malts slipping by 14%.

Both Tequila and vodka fell by 7% with Casamigos plunging by 20%. Don Julio, on the other hand, rose by 3%.

In terms of the group’s key vodka brands, Cîroc plummeted by 26%, Smirnoff declined by 3% and Ketel One dropped by 5%.

Gin reported a 8% decrease after Gordon’s was down by 6% and Tanqueray tumbled by 11%.

Rum sales declined by 6%, with Captain Morgan dropping by 5%. Canadian whisky brand Crown Royal fell by 1%.

The company’s RTD portfolio dipped by 1% while beer climbed by 14%.

Fiscal 2025 outlook

In its forecast for its next financial year, Diageo expressed its confidence that organic net sales growth would return once the consumer environment improved.

“We are focused on getting back into our medium-term guidance range (organic net sales growth of 5% to 7%) and we expect organic operating profit to grow broadly in line with net sales growth as we continue to invest in the business,” the company said. “Longer term, we expect to deliver organic operating profit growth ahead of organic net sales growth.”

Crew highlighted that the group ended the year “gaining or holding share in measured markets totalling over 75% of our net sales value, including in the US”.

She added: “We have taken actions to manage the inventory issues in LAC; we have strengthened our consumer insights and redeployed resources towards the best growth opportunities; we have stepped up our route-to-market across several markets, including our most significant transformation in at least a decade in our US spirits organisation; we have delivered record productivity savings of nearly US$700 million; and we have generated US$2.6 billion in free cash flow while increasing strategic investments.”