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European Region Still in Decline at Diageo

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European Region Still in Decline at Diageo

European Region Still in Decline at Diageo
May 06
11:03 2011

Greater focus on its priority brands and increased investment in emerging markets has allowed Diageo to deliver 7% organic net sales growth in its third quarter, and to increase sales by 5% on an organic basis and volume by 2% in the nine months ended March 31st 2011, compared to the comparable period last year. However, while its regional markets of North America (3%), Asia Pacific (9%) and International (!4%) all registered organic net sales growth, Europe declined by 3%.

On a reported basis net sales grew by 3% in the quarter ended 31 March 2011 and by 2% in the nine months ended 31 March 2011, against the comparable prior period in each case.

Paul Walsh, chief executive of Diageo.

‘Trading in the third quarter was in line with our expectations that the second half would be stronger than the first,” comments Paul Walsh, chief executive of Diageo. “In North America consumer trends are improving, albeit modestly, and Diageo’s scotch, vodka and tequila brands performed strongly in the quarter. Better mix and lower discounts offset volume decline to drive top line growth. Overall trading in Europe continues to be challenging although in the quarter stronger price/mix in Great Britain and Russia offset weaker price/mix in Ireland and Greece and a deterioration of the on trade in Spain. Further improvement in price/mix in both International and Asia Pacific in the quarter were driven by the continuing strength of our scotch brands especially around Chinese new year, improving trends for our beer brands in Africa, especially in Nigeria, and stronger growth in South Africa and Australia.”

He adds: ‘This overall improving trend is the result of our focus on our priority brands and our strengths in market. We remain confident that our up weighted marketing investment together with the increased investment we have made in emerging markets in the year will continue to deliver improving performance.’

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