Emerging markets prove thirsty for spirits with a taste of luxury

Marc Sidwell
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WITH results as strong as its premium scotch, Diageo more than met expectations yesterday, topping up its share price and buying a round of applause for its exposure to emerging markets growth. Profit before tax rose 32 per cent year on year.

One of the interesting aspects is exactly what the emerging markets are buying. Even as their economies grow at rates unimaginable anytime soon in Europe, you would be forgiven for thinking the new middle-class topers of Latin America, Africa and Asia Pacific might be supping more basic brews. But take vodka. Diageo saw super premium brand volume up 30 per cent overall, and both Latin America and Asia Pacific posted net sales growth of over 50 per cent in handcrafted Ketel One. Or whisky (and whiskey), where again premium and super premium brands grew in all regions. Johnnie Walker grew net sales 15 per cent overall, and Gold Label net sales more than doubled in Asia Pacific. As for gin – “super premium gin grew over 20 per cent in Asia Pacific and Latin America as the category saw a resurgence as the ‘white spirit of choice’ with bartenders.” Although it was also true that “Africa saw double digit net sales growth of value gin brands”.

All of this is good news for Diageo, of course, which is primarily a purveyor of premium spirit brands. But it’s also a reminder that the economic story of emerging market growth is about shaking up business opportunities at every level – and making the ingredients of a really great martini available worldwide.