Briefs: Diageo, Grolsch and Folgers Coffee

By Neil Merrett

- Last updated on GMT

Related tags: Cent, Diageo

This week, Diageo posts half-year profit improvements thanks to
Guinness and spirits, Grolsch continues to struggle with the UK
premium lager market, and P&G reportedly hikes prices for its
coffee brands.

Diageo's big brands behind profit growth ​Diageo said that sales were up by seven per cent to £4.2bn in organic terms for the first half of the financial year, on the back of strong demand for both the group's spirits and Guinness brands. Organic operating profit climbed nine per cent over the period to £1.4bn, with operating margins up by 0.8 percentage points during the six-month period ending 31 December 2007. Paul Walsh, group chief executive for Diageo said that the growth had generally been felt throughout its international operations, though demand in the US and Eastern European for its premium products were significant contributors to the improvements. "Looking at our individual brand performances; Johnnie Walker has again delivered double-digit net sales growth as have Smirnoff and Captain Morgan,"​ he stated. "The performance of Guinness has also improved with net sales up six per cent and share gains inGreat BritainandIreland." ​ Walsh added that despite concerns over possible market volatility during the second half of the year, the company will retain its current guidance of an expected nine per cent increase in operating profit for the full year. Grolsch reveals UK premium lager concerns ​Netherlands-based brewer Royal Grolsch, has signalled concerns over continued difficulties within the British premium beer segment. Despite a five per cent improvement in full year sales in organic terms to €332.9m, the brewer's UK-based joint venture with Coors continued to experience difficulties, with the premium lager segment currently under severe pressure, according to Royal Grolsch. These difficulties led to a ten per cent fall in sales volumes in the country, belying an overall international volume improvement of twenty per cent, the company said. The claims come after SABMiller last week announced it had completed its takeover of Grolsch. P&G raises coffee prices ​Procter & Gamble said this week that it was considering hiking the list prices for its Folgers range of coffees by six per cent, according to press reports. A spokesperson for the company confirmed the price strategy this week, according to the Reuters news agency, ahead of P&G's plans to operate the brand as an individual company. The group said it had not yet decided whether it would separate the coffee brand from its business operations through a spin-off or split-off venture. ​The separation was announced earlier this month as P&G said it was enacting price increases throughout its food, beverage and personal care portfolio to offset higher commodity and energy costs, despite improved revenues over the last financial quarter. The cost of coffee rose sharply in December 2007, particularly for the Arabica variety, with the monthly average International Coffee Organisation composite price up by about three per cent to $1.18 per pound (lbs) over the same costs in November.

Related topics: Tea and Coffee, Diageo

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