Drinks giant Diageo says lockdown has driven demand for premium whisky and tequila

Drinks giant Diageo today revealed coronavirus lockdown has driven a demand for higher-end spirits as customers begin to create their own cocktails at home.

The global firm beat analysts forecasts to report a one per cent rise in organic net sales for the six months to December, despite the impact of the pandemic.

In the UK, net sales grew two per cent, with sales in supermarkets and off-licences offsetting the fall from pub closures during long periods.

Beer sales were hardest hit – primarily driven by Guinness pumps not being pulled as British pubs faced restrictions and lockdowns.

Bosses said the famous stout did however see a surge in off-licence sales, with cans of Guinness draft rising 24 per cent during the period globally.

Spirits sold strongly, rising 15 per cent, with ready-mixed cocktails and Baileys also popular – up 8 per cent and 4 per cent respectively.

The global firm beat analysts forecasts to report a one per cent rise in organic net sales for the six months to December, despite the impact of the pandemic. Pictured: Chief Executive Ivan Menezes

The company’s strongest performance during the final half of 2020 was seen in North America, where net sales rose 12 per cent. US spirits sales were up 15 per cent with tequila the strongest driver.

Diageo’s tequila sales in North America jumped 80 per cent, with Don Julio and Casamigos particularly impressive.

Scotch was up 6 per cent, with Johnnie Walker and Buchanan’s offsetting falls in malt whisky sales. Ciroc and Smirnoff vodka also saw growth of 6 per cent and 17 per cent respectively.

There was a less impressive performance in Europe and Turkey however, with the reduction in airport passengers hitting its significant travel division.

Johnnie Walker whisky is particularly popular among international visitors to Europe from Asia.

Sales in Diageo’s Travel Retail Europe division dropped 72 per cent during the period, while pub, cafe and restaurant closures hit on-trade business.

Beer net sales in the region fell 34 per cent, with Guinness raised as a significant factor, but there was growth of 15 per cent in spirits.

Diageo reported total net sales fell 4.5 per cent to £6.9 billion at the end of 2020, with the firm posting pre-tax profits of £2.2 billion – down 8.3 per cent on the previous year.

Mr Menezes said Diageo’s premium brands – such as Don Julio tequila (pictured), which sells for more than £40 a bottle – have performed very well throughout the pandemic as people ‘drink better.’

Diageo confirmed organic net sales were up one per cent despite the disruption, with the firm posting pre-tax profits of £2.2 billion – down 8.3 per cent on the previous year. Pictured: Casamigos tequila

Ivan Menezes, Chief Executive of Diageo, told BBC Radio 4 that spirits are growing faster than wine and beer as people discover cocktails and indulge in higher-end brands at home.

He added that Diageo’s premium brands – such as Don Julio tequila, which sells for more than £40 a bottle – have performed very well throughout the pandemic as people ‘drink better.’

Mr Menezes said: ‘Spirits are growing faster than wine and beer as people are discovering cocktails and indulging in higher end brands.

‘There’s a long-term trend towards people drinking better that’s happening all over the world. Not drinking more, drinking better, and our premium brands as a result are performing very well through this period.

‘If you look at tequila for example, brands like Don Julio and Casamigos – which are $50 a bottle – our business in the US was up 60 per cent.

‘A brand like Baileys which is all about indulgence at home and with the trend towards at home cooking and treating, Baileys was up double digits so our portfolio and our pivoting to where the consumer occasions at home has worked well.’

He added: ‘We delivered a strong performance in a challenging operating environment, returning to top line organic sales growth during the half.

‘We rapidly pivoted to the channels and occasions most relevant to consumers and invested behind new opportunities.’

Diageo finance director Kathy Mikells added off-licence sales saw strong growth across the globe.

She said: ‘We’ve been particularly strong in the United States, Australia, Brazil and France where we’re gaining very strongly.

‘We’re seeing very strong share gains and performance in the off-trade, notwithstanding that we are being impacted by the restrictions that are on trade.’

Ms Mikells added that customers are turning to trusted brands and premium products during the pandemic and looking for home comforts.

‘People are really interested in the occasional treat and indulgence,’ she said. ‘Baileys was up 12 per cent in North America, and our apple pie Baileys exemplifies innovation to help support that brand.’

Diageo’s Great Britain boss, Dayalan Nayager, said customers here helped the company gain market share for Johnnie Walker, Bell’s, Bulleit, Haig Club, Singleton and Talisker.

‘Innovation remained a key focus, with 43 per cent of all spirits innovation in Great Britain coming from Diageo in the half,’ he said.

‘Gordon’s 0.0 per cent hit the shelves in December, providing consumers with choice for different occasions, and we introduced Villa Ascenti Rosa in September as part of our super-premium gin offering.’