The brands driving growth for Diageo Australia

Diageo Australia is celebrating its net sales growing 13% in the first half of FY20, driven by strong performance in scotch, RTDs, liqueurs and gin.

Scotch net sales for Diageo Australia increased 10%, driven by Johnnie Walker Blue Label and the new "Johnnie Walker Game of Thrones Limited Editions A Song of Ice and A Song of Fire" innovation.

RTD net sales for Diageo Australia increased 12% as Gordon's Premium Pink Gin & Soda and Tanqueray & Tonic continued to grow, aided by new innovation through Tanqueray Flor de Sevilla & Soda.

Gin grew double digits for Diageo Australia through Gordon's and Tanqueray, while Baileys maintained strong growth "driven by both core brand and innovation".

Bundaberg net sales grew 5% as a result of growth from the core variant Bundaberg UP.

Outside of North America (down 5%), vodka was up 3%, with growth in every region, driven largely by Mexico, Kenya and Australia.

Reported net sales (£7.2 billion) for Diageo increased 4.2% globally, driven by organic growth.

Ivan Menezes, Chief Executive, said: "Diageo has delivered another good, consistent set of results in the first half, with broad based organic net sales growth across regions and categories. We have continued to increase investment behind marketing and growth initiatives, while expanding organic operating margins.

"These results reflect the changes we are making in the business to drive shifts in our culture. They are in line with our current mid-term guidance and have been delivered in the face of increased levels of volatility in India, Latin America and Caribbean and Travel Retail.

"For the full year, we therefore expect organic net sales growth to be towards the lower end of our 4 to 6% mid-term guidance range. We continue to expect organic operating profit to grow roughly one percentage point ahead of organic net sales.

"There is ongoing uncertainty in the global trade environment and we would not be immune from further policy changes. We remain focused on building the long-term health of our brands, supported by data-led insights and a culture of everyday efficiency. With the consumer at the heart of the business and with greater agility and discipline in the execution of our strategy, we are growing Diageo in a consistent, sustainable way."

Whisky faces challenges

At a category level, rapid growth in tequila, Canadian whiskey and Chinese white spirits balanced softer scotch performance.

"Our long-term strategy in scotch remains unchanged with core brands and innovation delivering significant growth in the past two years," Menzes said.

"Overall, net sales were flat in the first half due to some specific challenges, primarily disruptions in Mexico, Travel Retail, in Peru and Chile. These adversely impacted Johnnie Walker Black Label and Johnnie Walker Red Label in particular. Overall, the brand remains strong with the Johnnie Walker reserve portfolio continuing its rapid growth with particularly strong performance from Asia Pacific.

"We are looking forward to celebrating Johnnie Walker’s upcoming 200th anniversary with the opening of the new Johnnie Walker home in Edinburgh, celebratory packaging and special releases.

"Innovation maintained its strong contribution to growth, driven by the Johnnie Walker Game of Thrones Limited Editions A Song of Ice and A Song of Fire and the Game of Thrones Single Malt Scotch Whisky Collection. Buchanan’s net sales continued to gain momentum and were up 9% with good growth in both the U.S. and Latin America, following increased investment over the past two years.

"Our scotch malts grew double digit in all regions with strong performance from Mortlach, Lagavulin and The Singleton. Primary scotch brands remained flat."