Guinness owner Diageo expects 16% surge in first-half global sales

The company, which also owns Johnnie Walker whisky and Tanqueray gin, ended its fiscal 2021 with one of the highest growth rates in its history
Guinness owner Diageo expects 16% surge in first-half global sales

Drinks giant Diageo - which owns Guinness and Baileys - is looking to continue to avoid any negative pandemic hit and post strong global sales growth in the first half of its new financial year.

Guinness and Baileys owner Diageo has said it expects to grow organic net sales in the double-digit percentage terms in the first half of its financial year, based on increased brand investments and a rapid consumer shift towards high-end brands.

Shares of the world's largest spirits maker rose as much as 3.4% to hit a record high of 3,948 pence.

Issuing guidance ahead of its capital markets day, the group - which also owns the Johnnie Walker whisky and Tanqueray gin brands - said it expects organic net sales growth of at least 16% in the first half of its fiscal 2022 year, which runs to the end of next June and organic operating profit growth to be ahead of sales growth.

It also anticipates accelerating organic sales growth to between 5% and 7% in the fiscal 2023-2025 period, compared with the 4% to 6% growth during 2017-2019. It also sees growing earnings by up to 9% by the end of its fiscal 2025.

"While we expect inflationary pressures to increase, we also expect to benefit from operating leverage, premiumisation, revenue growth management and productivity gains," chief financial officer Lavanya Chandrashekar said.

The pandemic has been a boon to Diageo as locked down consumers stocked up on alcohol and beers and traded up to more premium versions due to higher savings.

The company ended its fiscal 2021 with one of the highest growth rates in its history, propelled by strong at-home demand in the US and partly due to the re-opening of bars and restaurants in Europe where vaccination is more widespread.

Rival Pernod Ricard, which owns Jameson Irish Whiskey and Absolut vodka, also said it expects strong growth in fiscal 2022, with a bit of moderation to what it had seen during the pandemic.

Diageo said, in September, that its new financial year was off to a "strong start" and forecast a boost to operating margins as people opt for premium brands and spend more at restaurants and bars.

While Diageo may have impressed elsewhere, Covid restrictions hit its Irish sales in its last financial year, with it seeing a 23% slump as the restrictions on pubs and hotels dealt a heavy impact. Diageo is heavily reliant on sales – particularly through Guinness – from the pub and bar sector here.

-Reuters and Irish Examiner

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