Price rises help Diageo offset European woes

Kasmira Jefford
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DRINKS giant Diageo reported a rise in sales in the second half of the year, driven by price rises and growth in the US of premium brands like Ketel One vodka and Bulleit Bourbon.

The maker of Baileys and Guinness beer saw global sales grow five per cent to £6.04bn in the six months to December, while operating profits rose 11 per cent to £2.05bn.

European sales, which make up about 28 per cent of Diageo’s total revenue, fell by two per cent as fast-growing Turkey, Russia and eastern Europe helped offset a fall of 19 per cent in crisis-hit southern Europe.

Faced with sluggish growth in Europe, Diageo has been on a buying spree as it looks to tap burgeoning middle classes in Africa, Asia and Latin America, where it aims to gain around half of its profits by 2015.

Chief executive Paul Walsh declined to comment further on the timing of its proposed takeover of India’s United Spirits, which is waiting regulatory approval by India’s Securities and Exchange Board.

“When complete, it will be a gigantic milestone for Diageo in building our presence in the world’s largest Whisky market,” he said.

Diageo saw underlying sales in Asia, which now accounts for about 14 per cent of sales, rise six per cent, dragged down by a contraction of the whisky market in South Korea.

Sales in Africa rose 10 per cent, driven by strong growth in spirits like Johnny Walker and in beer.