Diageo boosted by ‘North American innovation machine’

1st February, 2013 by Ron Emler - This article is over multiple pages: 1 2

“God bless America” might have been the underlying theme when Paul Walsh, Diageo’s chief executive, unveiled the results for the second half of last year.

Paul Walsh

Paul Walsh

He said that the world’s biggest premium alcohol drinks group was “exactly on track” at the half-way point of its three-year medium-term strategy, but also agreed that “the US is recovering a bit quicker than we thought” – the implication is that he might have been marginally behind target had trade in the US not been comparatively buoyant.

North America, which accounts for about one-third of Diageo’s £6 billion-plus sales excluding taxes, generated 30% of the group’s extra revenues in the half year and almost 40% of the profits, underlining its key role in Diageo’s business. What Walsh called “the North American innovation machine” improved its operating margin by more than a percentage point. Vodka sales were 9% ahead and whisky achieved “double-digit growth”.

Walsh was in confident mood, stressing Diageo’s “top line growth and marketing improvements” which generated an additional 9% operating profits in the half year, 9% growth in earnings per share and an extra £125m free cash flow. The interim dividend was raised by 9% – “the third consecutive dividend upgrade since we launched our three-year medium-term guidance” (of average annual organic growth of 6%).

“We are a strong business, getting stronger,“ he said. And Diageo would concentrate on a three-pronged strategy of “improving net sales growth, delivering margin expansion and targeted acquisitions to create access to new growth”.

Diageo has been on a spending spree over the past couple of years, and it is not over yet. Although Walsh walked away from Jose Cuervo – he wanted to own the tequila brand rather than just distribute it – he is on the verge of landing India’s United Spirits in a complicated deal that will give him control for about £1.3 billion.

There have been rumours that the Indian stock market authorities are unhappy with how the takeover is structured, but their doubts are not thought to be insurmountable. Walsh says that he has to “respect the confidentiality of the process” but it is a matter of “when” the deal is consummated not “if”. Indeed, Delhi sources say that the Indian government would be unhappy if any undue obstacles were put in Diageo’s way.

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our newsletters

Job vacancies

Brand Ambassador – Santa Rita Estates

Santa Rita Estates
London or Hertfordshire but with flexibility to travel, UK

Sales Executive - Wine and Spirits Awards

The Drinks Business
Central London, UK

On-Trade Channel Manager

Delegat Europe Limited (UK)
London / Midlands, GB

Trade Marketing Analyst

Delegat Europe (UK)
London, GB

Key Account Executive

Delegat Europe Limited (UK)
London / Midlands, GB

Senior National Account Manager

Conviviality
London, UK

ON-TRADE Sales Executive

Roberson Wine
London, UK

OFF-TRADE Sales Executive

Roberson Wine
London, UK

Judging Week Runners

Decanter World Wine Awards
ExCel Centre, London E16, UK

Sales Administrator

Les Caves de Pyrène
Guildford, UK

Retail Commercial Executive

Laithwaite's Wine
Theale, Berkshire

Wine Buyer

Conviviality Plc
Crewe, UK

Sales Account Manager - On-Trade

Berkmann Wine Cellars
Liverpool

Sales Account Manager - On-Trade

Berkmann Wine Cellars
M3/M4 corridor

Media Sales Manager - Hong Kong

The Drinks Business Hong Kong
Hong Kong

The Global Merlot Masters 2017

Deadline : 31st March 2017

The Prosecco Masters 2017

Deadline : 10th March 2017

db Awards 2017

Deadline : 28th April 2017

The Global Organic Masters 2017

Deadline : 3rd March 2017

Click to view more

The Global Sparkling Masters

the drinks business is thrilled to announce the launch of The Global Sparkling Masters

The Global Rosé Masters 2016

the drinks business is proud to announce the launch of the Global Rosé Masters 2016.

The Prosecco Masters 2016

Now in its third year, the competition will reflect the growth in popularity of this fresh and exciting sparkling wine from the picturesque regions of Veneto and Friuli.

The Global Pinot Noir Masters 2016

After the success of last year’s competition that judged over 250 wines from no less than 16 countries, the drinks business is proud to announce the third year of the Global Pinot Noir Masters

Click to view more