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Diageo records Q1 sales and volume growth

Diageo has recorded an encouraging start to the economic year, delivering growth in both sales and volume.

In the quarter ended 30 September 2011 Diageo delivered organic net sales growth of 9% against the comparable period with volume up 5%.

Latin America and the Caribbean led the way with net sales growth of 30%. Asia Pacific recorded sales growth of 14% on the year, while North America, Europe and Africa all delivered single digit growth.

In North America net sales growth was driven by continued positive price/mix across all categories while volume was down 2%.

The London-based company, whose spirit brands include Smirnoff vodka, Gordon’s Gin and Baileys, said the wine category remained weak and beer was broadly flat.

Double digit growth in Russia and eastern Europe, in Germany and the Nordic markets and in Spain, drove net sales growth in Europe.

The world’s biggest drinks company said there was continued strong performance in all African markets except South Africa, due to the growth of lower-priced locally-produced spirits.

In Asia Pacific the developed markets delivered low single digit net sales growth while the developing markets grew very strongly led by the performance of Johnnie Walker.

Paul Walsh, Diageo chief executive, said: “Net sales growth was marginally ahead of expectations and the quarter did benefit from some one-off factors which are not expected to reoccur in the second quarter. Consumer trends are broadly unchanged.

“We have delivered positive price/mix in North America, an improvement in net sales growth in Europe and we have driven strong growth in the developing markets with net sales up 20%.

“We continue to expect that net sales growth for the first half will improve on that delivered in fiscal 2011.

“We are alert to any impact which the fragile global economy may have on trading patterns as we continue to build our brands with consumers and enhance our relationships with customers.

“The sharpened focus we have brought to our investment in marketing, innovation and sales to build the strength of our brands and our routes to market underpins our confidence in the performance of the business.”

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