Diageo gets lift from emerging markets and US

Kasmira Jefford
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DIAGEO yesterday posted a five per cent jump in underlying sales driven by demand for spirits such as Smirnoff vodka in the US and strong sales of scotch in emerging markets like China.

The drinks giant said net sales in North America, which accounts for a third of its sales, rose six per cent in the quarter to 30 September, boosted by campaigns behind its Smirnoff vodka and Captain Morgan brands.

The group has also been benefitting from a recovery in the US spirits market and more consumers opting for its “super-premium” brands like Ciroc, its luxury French Vodka label.

Sales rose by 16 per cent in its Latin America and Caribbean region – its fastest growing market – despite a tough comparison in the prior year when sales rose 30 per cent.

In Africa, sales rose 11 per cent in the quarter, with strong growth in spirits in South Africa and in beer in East Africa helping to offset weakness in Nigeria.

Overall, sales in Europe declined by one per cent despite double-digit growth in emerging market Turkey. Russia was dragged down by weak trading in western and southern regions, with consumer demand in France hit by January’s duty hike.

Meanwhile in Asia Pacific, sales rose two per cent, below analyst expectations of around eight per cent, which the group blamed on weakness in South Korea and Australia.

The group expects half its turnover to come from fast-growing Asian, African and Latin American markets by 2015, up from 40 per cent last year.