Spirited performance by Old Bushmills boosts Diageo
Northern Irish whiskey distiller Old Bushmills increased volumes and sales in the year ended 30 June 2014, according to parent company Diageo. Net sales rose by 13 per cent.
The company, based in county Antrim and famed as the world's oldest licensed distillery, made progress in a challenging year for Diageo, the world's biggest drinks business. The group saw net sales of all its products rise by just 0.4 per cent, reflecting mixed performance: growth in North America, stability in Western Europe and weakness in emerging markets.
Old Bushmills, among Diageo's strategic brands, has strong business in North America, Europe and Russia. Global sales rose by seven per cent during the year, spurred on by the launch of Bushmills Honey and a major promotional campaign.
Sales of Baileys, much of which is produced at the group's plant in Northern Ireland, were broadly flat, with a decline in Western Europe counter-balanced by an increase in British sales following the launch of a new product.
Ivan Menezes, Diageo chief executive, commenting on the year ended 30 June 2014, said: "This year our business has faced macroeconomic and market specific challenges that have impacted our top line performance. But we have gained share and expanded margin while continuing to invest in our brands, our markets and our people to create a stronger business that will deliver on the long term growth opportunities of this attractive industry.
"Our regional performance has been mixed. In North America we have again delivered top line growth and significant margin expansion and our Western European business is now stable. Emerging market weakness, often currency related, but also including some specific issues, such as the anti extravagance measures in China, has led to weaker top line growth.
"We have made progress in accelerating the performance of our premium core brands but these brands have been under pressure given the environment this year, although we have delivered share gains in a number of markets.
The tougher trading environment this year has confirmed my view that these six priorities give the business clarity and focus. We have simplified the organisation, freeing up everyone to act like an owner and sell or help to sell, changing behaviours across the business.
Therefore we start fiscal 15 as a more agile organisation, building on the changes in behaviours that have been made across the business this year. The catalysts for a near term recovery of consumer spend in the emerging markets are still weak however the future growth drivers for this industry, its aspirational nature as consumers in the emerging markets see increasing disposable income, are undiminished. Diageo has leading brand and market positions and financial strength and our recent acquisitions have given us a strong emerging market footprint. The opportunity for Diageo to realise our full potential and deliver our performance ambition remains an exciting one."
Profits have dropped at Guinness brewer Diageo after it was forced to write down its stake in the Chinese white spirits company Shui Jing Fang following "anti extravagance measures" imposed by the Chinese government.
The company posted pre-tax profits of £2.7bn for the year to 30 June 2014, down from £3.1bn at the end of the same period last year. Operating profit before exceptional items also fell, from £3.5bn (2013) to £3.1bn (2014).
Overall profit for the year fell from £2.6bn in 2013 to £2.2bn this year, whilst 2014's sales of £13.98bn were also down from last year's £15.3bn.
Ivan Menezes, Diageo chief executive, said the company's regional performance had been "mixed" and the measures in China, which prevent expensive gift-giving, had impacted the growth.
Remaining optimistic, however, Menezes added: "We have gained share and expanded margin while continuing to invest in our brands, our markets and our people to create a stronger business that will deliver on the long term growth opportunities of this attractive industry.
"The opportunity for Diageo to realise our full potential and deliver our performance ambition remains an exciting one."
Menezes added that recent acquisitions had given the company a "strong emerging market footprint".
Diageo acquired tequila brand DeLeón at the start of the year and recently heavily invested in plans to build a new distillery in the USA.