Diageo profits up despite faltering Guinness brand

Drinks giant Diageo raised a glass to improved profits today despite facing declining sales of Guinness in Ireland.

The company reported pre-tax profits lifted to £2.1bn (€3.1bn) during the year to June 30, compared with £1.9bn (€2.82bn) for the same period last year.

Diageo, whose drinks also include Captain Morgan Rum and Jose Cuervo tequila, cheered increased sales of spirits, wines and beers across the group.

But it admitted challenges in the Irish beer market had “adversely impacted” on top line growth in Europe as it saw Guinness' Irish sales decline 3% during the year.

Net sales of the firm's Smirnoff Vodka brand was up 8% in the UK after the company promoted signature cocktails and ramped up marketing.

The volume of Guinness sold in Britain declined 1%, although net sales grew by the same percentage after the company increased the price of a draught pint.

Chief executive Paul Walsh said: “Diageo’s strong full-year performance is the result of brand-building marketing campaigns, better sales execution to build superior relationships with our customers, and successful new product launches.”

The company said the drop in sales of Guinness in Ireland had been caused by increased levels of competitor investment, although it is attempting to address the fall.

Trials are already taking place in around 80 outlets to test whether a new lower-alcohol Guinness will be able to tempt back customers.

Despite the slump in Ireland, Guinness is still tempting drinkers elsewhere in the world, with sales increasing in Russia.