Diageo sales down as global spirits demand falls — except in North America
Drinks giant Diageo (DGE.L) on Tuesday reported that net sales had fallen in all its global markets apart from North America in the 12 months ending 30 June, as demand for whisky, vodka, and gin weakened as bars and restaurants closed across the world due to the pandemic.
The world’s biggest spirits company posted a bigger-than-expected 8.4% drop in organic net sales for the year. Sales in Asia fell 16% after governments in Thailand and India banned alcohol sales as part of their coronavirus lockdown measures, and China effectively cancelled Chinese New Year celebrations.
Supply-chain disruptions also had an effect on sales in European, African, and Latin American markets.
However, the North American Market saw 2% net sales growth, where, Diageo said, demand for its tequilas and pre-mixed drinks were was high.
The owner of Johnny Walker whisky and Tanqueray gin said in its preliminary results for the year ending 30 June, that operating profit declined by 47.1% to £2.1bn ($2.7bn), while as sales fell by almost 9% to £11.8bn.
"After good, consistent performance in the first half of fiscal '20, the outbreak of Covid-19 presented significant challenges for our business, impacting the full year performance,“ said Diageo chief executive Ivan Menezes said in a statement.
“While the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 21, I am confident in our strategy, the resilience of our business and am very proud of the way our people have responded. We are well-positioned to emerge stronger."
Diageo, which abandoned its full-year forecast in April, said it could not provide a forecast for the year.
Shares in Diageo fell by over 6% in the market opening:
