Across other regions, the spirits giant reports strong sequential improvement compared to the second half of fiscal 20, although the pandemic and continuing restrictions continue to affect some markets and sales are down on the comparable period for the previous fiscal year.
Tequila and RTD drinks are the fastest growing categories for Diageo: with tequila up 61% and RTDs up 13% worldwide.
Strongest market: North America
Diageo's largest market, North America, delivered net sales growth of 12%.
US Spirits net sales increased 15%, with growth across all categories, driven by ‘resilient consumer demand'. Tequila sales increased 80% with Don Julio growing 56% and Casamigos growing 139% with both gaining spirits market and tequila category share. Diageo says targeting the off-trade has paid off with “the acceleration of growth in our tequila portfolio reflecting strong activations in the at-home occasion.”
Strong growth in tequila is reflected globally (up 61%) with the category now representing 7% of Diageo’s net sales.
Net sales of Crown Royal in the US increased 4%, Bulleit grew net sales 17%, Scotch grew 6% (driven by good performances from Johnnie Walker and Buchanan’s partially offset by a decline in malts). Vodka net sales grew 6% with Cîroc delivering net sales growth of 17% and Smirnoff net sales increasing 3%. Baileys net sales increased 12% driven by a combination of pricing, new innovation and a continued focus on Baileys' positioning as a year-round, indulgent treat. Captain Morgan net sales grew 9% driven by growth in Captain Morgan Spiced and innovations.
Global sales figures H1 2021
- Reported net sales of £6.9bn, down 4.5%, as organic growth of 1% was more than offset by unfavourable exchange. Reported operating profit of £2.2bn declined 8.3%, driven by unfavourable exchange and a decline in organic operating profit.
- Organic net sales up 1%, despite a significant impact from Travel Retail and on-trade restrictions. North America was up 12.3%, offsetting declines in other regions, except for Africa which was broadly flat.
Other regions: flat or declining sales
Across other regions Diageo reports sequential improvement compared to the second half of fiscal 20: which it credits to execution in the off-trade channel and some re-openings in on-trade channels.
However, these all reported flat or declining net sales compared to the H1 20 (July to December 2019).
Europe and Turkey net sales declined 10%. Good net sales growth was seen in Turkey, Northern Europe and Great Britain, thanks to strength in the off-trade; but Ireland, Southern Europe and Eastern Europe were significantly impacted by on-trade channel restrictions.
Africa net sales were flat, with growth in Nigeria not enough to offset a 10% decline in South Africa as a result of alcohol sales bans and restrictions.
Net sales in Asia Pacific declined 3% overall, dragged down by restrictions and reduced international travel in South East Asia and the Middle East. In Greater China, however, net sales increased 15% driven primarily by Chinese white spirits and Scotch. (Chinese white spirits grew 20%, Scotch net sales increased 9% with double-digit growth in Scotch malts and Johnnie Walker super deluxe).
In Australia, net sales increased 23% with growth in all key categories thanks to strong off-trade momentum.
RTDs have proved particularly popular in the country: net sales grew 30% driven primarily by Bundaberg as well as strong growth in Smirnoff and Gordon's due to the Smirnoff Spiked Seltzers and Gordon’s Pink Gin Premix innovations (globally RTDs grew 13% and now represent 4% of Diageo net sales thanks to growth in Australia as well as North America).
Scotch net sales increased 17% driven by Johnnie Walker super deluxe. Gin net sales grew 48% due to continued momentum in Gordon's, Gordon's Premium Pink Distilled Gin and Gordon’s Sicilian Lemon as well as Tanqueray. Baileys net sales increased 29% driven by strong growth in Baileys Original and Baileys Red Velvet innovation. Rum net sales delivered 20% growth driven by Bundaberg and Captain Morgan. Vodka net sales grew 23% due to Smirnoff.