You are currently viewing the International Edition. You can also switch to the Hong Kong Edition.
Friday 3 July 2015

Diageo net sales drop by £1.1 billion

31st July, 2014 by Lauren Eads

Diageo saw its net sales tumble by £1.1 billion in 2014 with weak sales in emerging markets and a continued slowdown in China blamed, as the company posted its end of year results today.

Ivan Menezes

Overall the company reported a net profit of £2.25 billion, a drop of 8% on 2013, with net sales falling by 9% to £10.3 billion, while shares in the company dropped from 103.1p to 95.5p a share.

The drop in net sales is representative of a £1.1 billion loss on last year, when the group posted revenues of £11.4bn.

The company said its regional performance had been “mixed” with China hit particularly hard due to continued “anti-extravagance” measures resulting in an international slow down of sales.

Ivan Menezes, chief executive of Diageo, said: “This year our business has faced macroeconomic and market specific challenges that have impacted our top line performance. But we have gained share and expanded margin while continuing to invest in our brands, our markets and our people to create a stronger business that will deliver on the long term growth opportunities of this attractive industry.

“Our regional performance has been mixed. In North America we have again delivered top line growth and significant margin expansion and our Western European business is now stable. Emerging market weakness, often currency related, but also including some specific issues, such as the anti extravagance measures in China, has led to weaker top line growth.”

The picture was more positive in North America which continued to perform well with growth driven largely by sales of Scotch, American whiskey and tequila, however performance in vodka was said to be “weak” with Smirnoff losing volume share in an “increasingly price competitive market”.

Diageo’s western European markets were said to be “stable”, despite “weak economies and fragile consumer confidence”, with net sales in the UK up by 2% driven by the strong performance of Baileys, Captain Morgan and Cîroc.

France also saw a 1% increase to net sales however in Ireland net sales declined 4% and in southern Europe by 3%.

Menezes added: “When I became CEO a year ago I aligned the business behind the key performance drivers which will deliver our strategy. We have made good progress. Reserve has performed strongly; innovation has driven incremental sales in all regions; route to consumer initiatives have been embedded across a number of markets with more to follow in fiscal 15; ruthless focus on driving out cost has driven margin improvement and we have reshaped the organisation and enhanced skills and capability across the whole team at Diageo. We have made progress in accelerating the performance of our premium core brands but these brands have been under pressure given the environment this year, although we have delivered share gains in a number of markets.

“The tougher trading environment this year has confirmed my view that these six priorities give the business clarity and focus. We have simplified the organisation, freeing up everyone to act like an owner and sell or help to sell, changing behaviours across the business.”

Looking toward the next financial year, Menezes said: “We start fiscal 15 as a more agile organisation, building on the changes in behaviours that have been made across the business this year. The catalysts for a near term recovery of consumer spend in the emerging markets are still weak however the future growth drivers for this industry, its aspirational nature as consumers in the emerging markets see increasing disposable income, are undiminished. Diageo has leading brand and market positions and financial strength and our recent acquisitions have given us a strong emerging market footprint. The opportunity for Diageo to realise our full potential and deliver our performance ambition remains an exciting one.”

One Response to “Diageo net sales drop by £1.1 billion”

  1. john mccheyne says:

    Indicative of how tough aged whisky and cognac and the like are to predict. Not only do you have the huge time lapse between productuion and sales , but how is any Board supposed to predict an anti-extravagance drive in a prime future market in many years time ?

Leave a Reply

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

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

If that's interesting, how about these?

Tesco sales take a tumble despite price cuts

Tesco's like-for-like sales fell by 1.3% in the three months to 30 May, an more...

Constellation to buy Meiomi for $315m

Constellation Brands is to buy Napa-based wine brand Meiomi for $315 million, more...

Hardys invests £4m in summer of cricket

Hardys has unveiled a new £4 million consumer marketing campaign to tie in more...

Digital and Communications Executive

£22,000-£26,000 dependent on experience

William Grant in World Cup deal

William Grant & Sons has been awarded exclusive spirits and champagne pouring more...

Flavoured styles lead drinks NPD

A new report from Nielsen shows that flavoured variants are dominating more...

Hart Davis Hart biggest in US

Chicago-based wine auctioneer Hart Davis Hart is the market leader in the US in more...

Marketing and eCommerce Manager

London, United Kingdom

Competitive, includes equity options

Lidl hints at plans for online wine shop

UK supermarket Lidl has not ruled out launching an online wine shop, reporting more...

Diageo 'shelves' £240m Chinese scheme

Swellfun, the Chinese subsidiary of drinks giant Diageo, has reportedly more...

Whisky has 'regained its attractiveness'

Scotch whisky is moving beyond its traditional consumer base and has "regained more...

Hatch Mansfield – Brand Manager

London, United Kingdom

Competitive salary

Diageo closes in on £200m Gleneagles deal

Drinks giant Diageo is reportedly “close” to agreeing a sale of its luxury more...

Yealands sells majority stake

Yealands Family Wines' owner Peter Yealand has agreed to sell 80% of the more...

Molson Coors UK acquires Rekorderlig

Molson Coors UK has acquired the rights to Swedish cider Rekorderlig in the UK more...

London Sales Manager / Key Account Manager

London, United Kingdom

Competitive - depending on skills and experience

US Senate passes bill to boost spirits exports

The US senate has been applauded by members of the spirits trade for passing a more...

Auction house snaps up online wine specialist

Online auction firm Bid for Wine has been sold to The Fine Art Auction Group in more...

UK market in growth as price increases slow

The latest figures from the Wine and Spirit Trade Association show that more...

Social Media Editor

Competitive

Diageo appoints North America president

Deirdre Mahlan, Diageo's chief financial officer, has been announced as the more...

SWA creates heavyweight London team

The Scotch Whisky Association has appointed a number of senior high-fliers from more...

UK reviewing alcohol intake guidelines

Health officials are to review the government's drinking guidelines, as more...

PR Senior Account Manager/Director

London, United Kingdom

Depending on experience

Diageo confirms Gleneagles sale to Shoreditch group

Diageo has confirmed the sale of its luxury hotel and golf resort in more...

Oregon producer takes international view

One of Oregon’s youngest wine estates has partnered with Jackson Family Wines more...