Ireland: Diageo’s net sales in Ireland grow 20% helped by Guinness price increases

Diageo's total net sales in Ireland grew 20%, helped by price increases for Guinness, while global sales of Baileys were flat on weaker demand in North America, the spirits and beers giant has said.

Global sales rose by 18.4% to £9.4 bln (€10.7 bln) in the six months to the end of December and "price increases and supply productivity savings more than offset the impact of absolute cost inflation on gross margin", the company said.

"We have delivered targeted price increases across all regions, enabled by our expertise in revenue growth management and supported by strong consumer demand for our brands," chief executive Ivan Menezes said in the earnings statement.

Diageo is one the world's largest drinks makers, with brands that include Johnnie Walker, Smirnoff, Captain Morgan, Baileys liqueur, Tanqueray, as well as Guinness.

It said that overall net sales grew 20% in Ireland, "driven by price increases and volume growth in Guinness".

In Britain, net sales grew 1%, reflecting a decline in spirits sales, but Guinness sales there also increased "supported by price increases and further recovery of the on-trade", it said, with Guinness sales performing strongly in North America.

Overall global sales of Baileys liqueur were "flat", despite growth across Europe.

London-listed Diageo shares fell by over 4.5% in the session. The company and its rivals had invested heavily in marketing and improving their products to capitalise on newfound demand following the Covid pandemic.

But Diageo's North America business, which accounts for nearly 30% of overall sales, reported organic sales growth of 3% in the six months, versus analyst estimates of over 6%.

The company said it expected North American organic net sales growth to "continue to normalise through the second half of fiscal '23, compared to the double-digit growth in the prior period".

Barclays analyst Laurence Whyatt said the market was surprised by the results because investors "don't really believe the European consumer is a sustainable consumer that can make up for the weakness in the US because of the cost-of-living crisis".

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