Diageo weathers Guinness downturn

Drinks giant Diageo hailed its performance in emerging markets today after profits rose despite sales of Guinness falling again in Europe.

Sales of the famous stout declined 5% across the continent, with volumes in core markets of the UK and Ireland hit by economic conditions, pub closures and the rise in VAT, as well as other duty increases that shifted drinkers towards supermarkets and off-trade outlets.

Spirits did better, with a strong showing by deluxe brands such as Johnnie Walker Blue Label Scotch and Tanqueray gin, while wine sales also picked up to lift UK sales overall by 2%. Ireland sales were 11% lower.

European revenues overall fell by 5%, which triggered a 23% slump in profits in the region to £621m (€703m), with sales in Spain and Greece especially weak due to the grim economic situation in the two countries.

Total sales in the year to June rose 2% to £9.94bn, with profits overall 5% higher at £2.36bn as Scotch and vodka sales in emerging markets – led by Johnnie Walker and Smirnoff – and good sales of top end brands in more mature markets offset the problems in Europe.