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New gin craze boosts drinks giant Diageo's sales

The soaring popularity of gin has helped drinks giant Diageo chalk up a 4.8 per cent rise in annual profits as it toasted a double-digit surge in sales of the tipple.

Published: July 27, 2018
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The Gordon's and Tanqueray group said sales of gin jumped 16 per cent in the year to June 30, making it one of the star performers for the group and accounting for 4 per cent of net revenues.

Its gin boost helped annual pre-tax profits swell to £3.7 billion, from £3.6 billion the previous year, on revenues 5 per cent higher at £12.2 billion on an organic growth basis.

The group said performance was particularly strong in the UK and Europe, with Tanqueray gaining market share and Gordon's benefiting from the launch of its Pink gin.

Sales of high-end gin have soared in recent years as it has come back in favour, with Britons spending £461 million on the spirit last year - up 32.5 per cent on 2016 and three times the sales seen in 2009, according to recent data from the Office for National Statistics (ONS).

The gin craze propelled half-year figures higher at posh tonic maker Fever-Tree earlier this week, with underlying half-year earnings up 35 per cent to £34 million on sales 45 per cent higher.

Alongside its full-year results, Diageo also announced a windfall for investors by unveiling a £2 billion share buyback over the financial year ahead.
But the group saw shares fall around 1 per cent as investors looked to take profits.

The figures showed a decent performance in the UK buoyed its European results, with underlying operating profits for Europe and Turkey up 10 per cent at £1.03 billion.

UK net sales lifted 8 per cent, with double-digit gin growth offsetting a 2 per cent fall for Smirnoff vodka.

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Chris Wickham, consumer goods analyst at equity development, said: "Diageo finished its financial year able to raise a glass all round the world, as every region contributed positively to organic sales growth.

"With constant investment in marketing its brands and a sharp eye on cash and costs, Diageo is setting itself up to win long term.

"With so much innovation around - from craft gins to funky beers - that's reassuring for its shareholders to know."

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