Diageo has returned to organic sales growth in a forecast-beating first half despite operating profits declining due to pub and bar closures and unfavourable currency swings. The company, which owns Smirnoff and Johnnie Walker, attributes its success to pivoting to changes in consumer occasions and investment in innovation.
Says Dayalan Nayager, Managing Director, Diageo Great Britain, “We have responded to a challenging operating environment with agility, using insights and data to pivot to changes in consumer occasions and behaviours. As a result, we have delivered net sales growth of 2%[1] in the half. Strong momentum in the off-trade more than offset declines in on-trade that resulted from trade restrictions and closures. We delivered strong market share gains in the GB off-trade across all categories, with Diageo’s GB retail sales value growing 30% in the half[2]. Johnnie Walker, Bell’s, Bulleit, Haig Club, Singleton and Talisker all increased market share.[3]
“Innovation remained a key focus, with 43% of all spirits innovation in Great Britain coming from Diageo in the half[4]. ‘Gordon’s 0.0%’ hit the shelves in December, providing consumers with choice for different occasions, and we introduced Villa Ascenti Rosa in September as part of our super-premium gin offering. In line with desire for convenience in GB, and the trend towards quality drinks and cocktails at home, we launched Captain Morgan Tiki, a lower ABV variant for the growing early evening occasion, and two premix cocktails: Gordon’s Pink Martini and Smirnoff Passion Fruit Martini.
“E-commerce is a small channel for spirits relative to other retail categories, but it provides an exciting growth opportunity. Diageo GB’s net sales in the e-commerce channel grew 100%[5]during the half, supported by the launch of a dedicated whisky store for our brands on Amazon UK; the launch of the Haig Club direct-to-consumer website; and the launch of online category shops with all key grocery retailers. These shops include whisky guides so shoppers can discover their perfect whisky and add it to their online baskets.
“As the British drinks trade continues to face one of its most challenging times ever, Diageo’s £30m “Raising the Bar” recovery fund in Great Britain has helped many thousands of outlets to date, delivering nearly 30,000 sanitiser stations, over 500,000 litres of hand sanitiser, as well as mobile bars, PPE equipment, outdoor ‘snugs’ and takeaway alcohol equipment, such as pint carriers.”
