Blueprint
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
27 July 2017
Commission File Number: 001-10691
DIAGEO plc
(Translation
of registrant’s name into English)
Lakeside Drive, Park Royal, London NW10 7HQ
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Indicate
by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule
101(b)(1):
Indicate
by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule
101(b)(7):
Preliminary results, year ended 30 June 2017
27 July 2017
|
Consistent strong performance delivered through effective execution
against our strategy
|
|
● Reported
net sales (£12.1 billion) and operating profit (£3.6
billion) were up 15% and 25%, respectively, reflecting favourable
exchange and accelerated organic growth
● All
regions contributed to broad based organic net sales growth, up
4.3%, and organic volume grew 1.1%
● Organic
operating profit grew 5.6%, ahead of top line growth, driven by
good progress on productivity partially offset by implementation
costs and one-off items
● Free
cash flow continued to be strong at £2.7 billion, increasing
by £566 million compared to the prior year, with net cash from
operating activities up £584 million to £3.1
billion
● Basic
eps of 106.0 pence was up 18%. Pre-exceptional eps was 108.5 pence,
up 21%, as higher organic operating profit and associate income
along with favourable exchange more than offset the impact of
disposals and a higher tax rate
● We
continue to expect mid-single digit organic net sales growth and
are raising our margin improvement objective from 100bps to 175bps
over the three years ending 30 June 2019
● On
26 July 2017 the Board approved a share buy-back programme to
return up to £1.5 billion to shareholders during
F18
● The
Board recommended a final dividend increase of 5% bringing the full
year dividend to 62.2 pence per share
● See
explanatory notes for explanation of the use of non-GAAP
measures.
|
|
|
|
Ivan Menezes, Chief Executive, commenting on the results
said:
|
“We
delivered a strong set of results including broad based improvement
in organic net sales and operating profit. Our performance
demonstrates the effective delivery of our strategy through
disciplined execution of our six priorities put in place four years
ago. We have delivered consistent strong performance improvement
across all regions and I am pleased with progress in our focus
areas of US Spirits, scotch and India.
Our
productivity work is delivering ahead of expectations allowing us
to reinvest in our brands, drive margin improvement and generate
consistent strong cash flow. Through productivity we have embedded
an everyday efficiency mind set in the business and with improved
data and insight we are making faster, smarter decisions on
investment choices.
Diageo
is a strong company today and we are confident in our ability to
deliver sustainable growth. We are raising our productivity goal to
£700 million with two thirds being reinvested in the business.
We continue to expect mid-single digit top line growth, and we are
raising our operating margin expansion objective to 175bps over the
three years ending 30 June 2019.
Following
three years of consistently improving cash flow generation the
Board has approved a share buy-back programme of up to £1.5
billion in F18.”
Key financial information
For the
year ended 30 June 2017
Summary
financial information
|
|
|
|
|
|
|
|
|
|
Volume
|
EUm
|
242.2
|
246.4
|
1
|
(2)
|
|
Net
sales
|
£
million
|
12,050
|
10,485
|
4
|
15
|
|
Marketing
|
£
million
|
1,798
|
1,562
|
3
|
15
|
|
Operating
profit before exceptional items
|
£
million
|
3,601
|
3,008
|
6
|
20
|
|
Exceptional operating items(i)
|
£
million
|
(42)
|
(167)
|
|
|
|
Operating
profit
|
£
million
|
3,559
|
2,841
|
|
25
|
|
Share
of associate and joint venture profit after tax
|
£
million
|
309
|
221
|
|
40
|
|
Exceptional non-operating items(i)
|
£
million
|
20
|
123
|
|
|
|
Net
finance charges
|
£
million
|
329
|
327
|
|
|
|
Tax
rate
|
%
|
20.6
|
17.4
|
|
18
|
|
Tax
rate before exceptional items
|
%
|
20.6
|
19.0
|
|
8
|
|
Discontinued operations (after
tax)(i)
|
£
million
|
(55)
|
-
|
|
|
|
Profit
attributable to parent company’s shareholders
|
£
million
|
2,662
|
2,244
|
|
19
|
|
Basic
earnings per share
|
pence
|
106.0
|
89.5
|
|
18
|
|
Earnings
per share before exceptional items
|
pence
|
108.5
|
89.4
|
|
21
|
|
Recommended
full year dividend
|
pence
|
62.2
|
59.2
|
|
5
|
(i)
For further details
of exceptional items and discontinued operations items see notes
3.
Outlook for exchange
Using
exchange rates £1 = $1.30; £1 = €1.13, the exchange
rate movement for the year ending 30 June 2018 is estimated to
adversely impact net sales by approximately £80 million and
favourably impact operating profit by approximately £70
million.
Outlook for tax
The tax
rate before exceptional items for the year ended 30 June 2017 was
20.6% compared with 19.0% in the prior year. As for most
multinationals the current tax environment is creating increased
levels of uncertainty. Our current expectation is that the tax rate
before exceptional items for the year ending 30 June 2018 will be
approximately 21%.
Acquisitions and disposals
The
impact of acquisitions and disposals on the reported figures was
primarily attributable to the prior period disposals of non core
assets, including the Desnoes & Geddes Limited beer business
based in Jamaica and the group’s wine businesses in the
United States and United Kingdom. The year on year net impact from
acquisitions and disposals on net sales was £(282) million and
on operating profit was £(43) million.
We
announced the acquisition of super premium tequila Casamigos on 21
June 2017 for an initial consideration of $700 million (£538
million), with a further potential $300 million (£230 million)
based on a performance based earn-out over 10 years. This is an
exciting opportunity for Diageo to extend our participation in the
fast growing tequila category in the United States, as well as
expand the brand internationally. The transaction is expected to
close in the second half of calendar 2017, subject to regulatory
clearances.
For
further details on the impact of acquisitions and disposals see
explanatory notes.
|
Net sales (£ million)
|
|
14.9% increase in reported net sales aided by favourable
exchange
Organic net sales growth of 4.3% with 1.1% volume growth and
positive price/mix
|
|
Net sales
|
|
|
2016
|
10,485
|
|
Exchange(i)
|
1,359
|
|
Acquisitions
and disposals
|
(282)
|
|
Volume
|
124
|
|
Price/mix
|
364
|
|
2017
|
12,050
|
(i)
Exchange rate
movements reflect the translation of prior year reported results at
current year exchange rates.
Net
sales grew 14.9%, driven by favourable exchange and organic net
sales growth which more than offset the impact from the prior year
disposal of non-core assets.
Organic
volume growth of 1.1% and 3.2% positive price/mix drove 4.3%
organic net sales growth across all regions.
|
Operating profit (£ million)
|
|
Reported operating profit growth of 25.3%
Organic operating profit growth of 5.6%
|
|
Operating profit
|
|
|
2016
|
2,841
|
|
Exceptional
operating items
|
125
|
|
Exchange
|
446
|
|
Acquisitions
and disposals
|
(43)
|
|
Organic
movement
|
190
|
|
2017
|
3,559
|
Reported
operating profit was up 25.3% largely driven by favourable
exchange, organic growth and lower exceptional operating charges.
Organic operating profit was up 5.6%.
|
Operating margin (%)
|
|
Reported operating margin growth of 244bps
Organic operating margin grew by 37bps
|
|
Operating margin
|
|
|
2016
|
27.1
|
|
Exceptional
operating items
|
1.24
|
|
Exchange
|
0.47
|
|
Acquisitions
and disposals
|
0.36
|
|
Gross
margin
|
0.57
|
|
Marketing
|
0.19
|
|
Other
operating expenses
|
(0.39)
|
|
2017
|
29.5
|
Reported
operating margin improved by 244bps driven by the comparison
against the prior period exceptional operating charge, favourable
exchange, the disposal of lower margin non-core assets and organic
operating margin improvement. Organic operating margin
improved 37bps driven by our productivity programme which enabled
gross margin expansion, marketing efficiencies and overhead
savings. The negative impact of other operating expenses arose
primarily from lapping the profit on the sale of United Breweries
shares and the sale of surplus land, partially mitigated by
productivity efficiencies in overheads.
|
Basic earnings per share (pence)
|
|
Basic eps increased 18% from 89.5 pence to 106.0 pence
Eps before exceptional items increased 21% from 89.4 pence to 108.5
pence
|
|
Basic earnings per share
|
|
|
2016
|
89.5
|
|
Exceptional
items after tax
|
(0.4)
|
|
Discontinued
operations after tax
|
(2.2)
|
|
Exchange
on operating profit
|
17.8
|
|
Acquisitions
and disposals
|
(1.8)
|
|
Organic operating profit growth(i)
|
7.6
|
|
Associates
and joint ventures
|
3.5
|
|
Net
finance charges
|
(0.1)
|
|
Tax
|
(7.3)
|
|
Non-controlling
interests
|
(0.4)
|
|
Other
|
(0.2)
|
|
2017
|
106.0
|
(i) Excluding
exchange
Basic
eps was impacted by net exceptional charges in the current year
compared to exceptional income in the prior year and a charge in
respect of an agreement with the UK Thalidomide Trust accounted for
in discontinued operations.
Eps
before exceptional items increased 19.1 pence as favourable
exchange, organic operating profit growth and higher income from
associates more than offset the negative impact from a higher tax
charge and the exchange impact on reported tax.
|
Free cash flow (£ million)
|
|
Net cash from operating activities(i) was £3,132
million, an increase of £584 million compared to the same
period last year. Free cash flow was £2,663 million, an
increase of £566 million
|
|
Free cash flow
|
|
|
2016
|
2,097
|
|
Capex
|
(23)
|
|
Exchange(ii)
|
446
|
|
Operating profit(iii)
|
199
|
|
Working
capital
|
204
|
|
Interest
and tax
|
(233)
|
|
Other(iv)
|
(27)
|
|
2017
|
2,663
|
(i)
Net cash from
operating activities excludes net capex, loans and other
investments ((£469) million in 2017 – (£451)
million in 2016).
(ii)
Exchange on
operating profit before exceptional items.
(iii)
Operating profit
excluding exchange, depreciation and amortisation, post employment
payments and non cash items but including operating exceptional
items.
(iv)
Other items include
post employment payments, dividends received from associates and
joint ventures, loans and other investments and discontinued
operations.
Free
cash flow improved £566 million in the year ended 30 June 2017
driven by favourable exchange, higher organic operating profit
growth and favourable working capital movement, partially offset by
higher tax payments. The improvement in working capital is
primarily driven by lower debtors due to focus on efficient debtor
management and reduction in overdue debt.
|
Return on average invested capital (%)(i)
|
|
ROIC increased 175bps
|
|
Return on average invested capital
|
|
|
2016
|
12.1
|
|
Exchange
|
0.92
|
|
Acquisitions
and disposals
|
0.03
|
|
Organic
operating profit growth
|
0.86
|
|
Associates
and joint ventures
|
0.17
|
|
Tax
|
(0.35)
|
|
Other
|
0.12
|
|
2017
|
13.8
|
(i)
ROIC calculation
excludes exceptional items.
ROIC
before exceptional items increased 175bps mainly driven by
favourable exchange and organic operating profit growth, partially
offset by higher tax charges.
|
Reported growth by region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
1
|
0.4
|
17
|
596
|
19
|
101
|
22
|
348
|
|
Europe,
Russia and Turkey
|
1
|
0.5
|
11
|
280
|
10
|
39
|
17
|
135
|
|
Africa
|
3
|
0.9
|
11
|
155
|
16
|
23
|
3
|
6
|
|
Latin
America and Caribbean
|
2
|
0.5
|
21
|
181
|
17
|
28
|
26
|
51
|
|
Asia
Pacific
|
(6)
|
(6.5)
|
17
|
343
|
14
|
42
|
23
|
92
|
|
Corporate
|
-
|
-
|
28
|
10
|
50
|
3
|
(26)
|
(39)
|
|
Diageo
|
(2)
|
(4.2)
|
15
|
1,565
|
15
|
236
|
20
|
593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
2
|
0.8
|
3
|
121
|
4
|
24
|
4
|
76
|
|
Europe,
Russia and Turkey
|
3
|
1.2
|
5
|
128
|
3
|
14
|
8
|
67
|
|
Africa
|
3
|
0.9
|
5
|
75
|
5
|
7
|
10
|
20
|
|
Latin
America and Caribbean
|
2
|
0.4
|
9
|
89
|
4
|
7
|
15
|
32
|
|
Asia
Pacific
|
(1)
|
(0.8)
|
3
|
70
|
-
|
(1)
|
4
|
19
|
|
Corporate
|
-
|
-
|
12
|
5
|
-
|
-
|
(15)
|
(24)
|
|
Diageo
|
1
|
2.5
|
4
|
488
|
3
|
51
|
6
|
190
|
(i) Before operating exceptional items.
|
Notes to the business and financial review
|
Unless otherwise stated:
●
commentary below
refers to organic movements
●
volume is in
millions of equivalent units (EUm)
●
net sales are sales
after deducting excise duties
●
percentage
movements are organic movements
●
share refers to
value share
See
explanatory notes for explanation of the calculation and use of
non-GAAP measures.
BUSINESS REVIEW
For the
year ended 30 June 2017
North America delivered net sales growth of 3% with full year
performance improving in US Spirits and Diageo Beer Company USA
(DBC USA), and Canada continuing to grow. Full year depletion and
net sales growth in US Spirits was 3%. Share gains were achieved in
all key categories except vodka. North American whisk(e)y, scotch
and tequila delivered the strongest category performance. North
American whisk(e)y net sales grew 12% as momentum on Crown Royal
and Bulleit continued. Scotch grew 8% driven by Johnnie Walker
Black Label, Buchanan’s and reserve variants. Captain Morgan
and Baileys performance improved versus last year. Vodka net sales
declined 8% primarily driven by Cîroc and Ketel One. Smirnoff
depletion volume was flat but net sales were down as we continued
to focus on inventory management and made price adjustments in the
first half. DBC USA net sales grew 3% with ready to drink growing
and beer flat. Net sales in Canada were up 3%. Marketing in North
America increased 4%, growing ahead of net sales with increased
activity on core brands in the second half. Operating margin
increased 51bps as positive mix and productivity initiatives
delivered gross margin expansion with zero based budgeting and
organisational effectiveness changes driving lower overhead cost,
partially offset by increased marketing.
|
Key financials £ million:
|
|
|
|
|
|
Acquisitions
and
disposals
|
|
|
|
|
Net
sales
|
3,565
|
588
|
19
|
(132)
|
121
|
4,161
|
17
|
|
Marketing
|
541
|
86
|
-
|
(9)
|
24
|
642
|
19
|
|
Operating
profit
|
1,551
|
270
|
15
|
(13)
|
76
|
1,899
|
22
|
(i)
Reclassification
comprise changes to a reallocation of the results of the Travel
Retail operations to the geographical regions.
|
Markets:
|
|
|
|
|
Global
giants, local stars and reserve(i):
|
|
|
|
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
Organic
volume
movement(ii)
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
2
|
1
|
3
|
17
|
Crown
Royal
|
10
|
12
|
30
|
|
|
|
|
|
|
Smirnoff
|
(1)
|
(2)
|
15
|
|
US
Spirits
|
2
|
1
|
3
|
17
|
Captain
Morgan
|
4
|
4
|
21
|
|
DBC
USA
|
2
|
(4)
|
3
|
12
|
Johnnie
Walker
|
3
|
6
|
23
|
|
Canada
|
2
|
2
|
3
|
17
|
Ketel
One vodka
|
(3)
|
(6)
|
9
|
|
|
|
|
|
|
Cîroc
|
(13)
|
(15)
|
(1)
|
|
Spirits
|
1
|
1
|
3
|
20
|
Baileys
|
3
|
2
|
19
|
|
Beer
|
(1)
|
(9)
|
-
|
8
|
Guinness
|
-
|
1
|
18
|
|
Ready
to drink
|
4
|
4
|
4
|
21
|
Tanqueray
|
(1)
|
(1)
|
15
|
|
|
|
|
|
|
Don
Julio
|
16
|
19
|
39
|
|
|
|
|
|
|
Bulleit
|
22
|
23
|
43
|
|
|
|
|
|
|
Buchanan’s
|
12
|
7
|
25
|
(i)
Spirits
brands excluding ready to drink.
(ii)
Organic
equals reported volume movement.
●
Net sales in
US Spirits were up 3%.
Diageo maintained its leadership position in the North American
whisk(e)y category in the United States with Crown Royal and
Bulleit delivering strong net sales growth and continued share
gains. Crown Royal net sales increased 13% with the launch of Crown
Royal Vanilla and the continued growth of Crown Royal Deluxe and
Crown Royal Regal Apple. Johnnie Walker net sales grew 8% with
growth in Johnnie Walker Black Label and reserve variants driven by
the successful ‘Keep Walking America’ platform, scaled
up liquid on lips and focus on gifting. Scotch malts grew 9% with
the launch of The Singleton and Lagavulin benefiting from the award
winning ‘My Tales of Whisky’ partnership with Nick
Offerman. Vodka decline was driven primarily by Cîroc and Ketel One declining 15% and
6%, respectively. Cîroc performance was primarily impacted by
the lapping of the successful Apple flavour innovation with a
smaller Mango launch and a decline in legacy flavours. Smirnoff
depletion volume was flat and brand equity scores improved as
consumers were reminded that it is a
quality vodka at a great price through a new campaign involving
celebrity influencers and activation against millennials and
multi-cultural consumers. Captain Morgan made strong share
gains in a weak rum category as it encouraged consumers to
‘Live like a Captain’ through its new campaign,
innovated with the launch of LocoNut and new signature serve
‘Morgan Mule’. Don
Julio net sales grew 20% building on the momentum of last year.
Tanqueray gin and Baileys grew net sales and continued category
share gains.
●
DBC USA net sales increased 3% with
ready to drink growing 5% and beer flat. Ready to drink growth was
driven by strong growth of Smirnoff Ice which benefited from a
packaging and liquid renovation, activation against the football
consumption occasion and the launch of two new flavours of Smirnoff
Ice Spiked, as well as the launch of Smirnoff Spiked Sparkling
Seltzer. Guinness net sales grew 1% offsetting declines on
Smithwick’s ale and Harp lager.
●
Net sales in
Canada grew 3%, driven by
growth in Smirnoff, Crown Royal, Johnnie Walker and ready to drink.
Smirnoff grew 5% through its continued association with music
through the Smirnoff Sound Collective and increased digital
presence in search. Crown Royal continued to benefit from the
‘We Make Whisky The Canadian Way’ campaign, which
highlights the brand’s quality and craftmanship and from the
launch of Crown Royal Vanilla. Ready to drink growth was driven by
Smirnoff which benefited from packaging renovation and launch of
new flavours.
●
Marketing grew 4% with increased
activity on core brands in the second half funded partially from
productivity initiatives.
Europe,
Russia and Turkey
|
The region delivered 5% net sales growth reflecting continued
strong performance in Europe and good net sales growth in Russia
and Turkey. In Europe, net sales were up 4% with Continental Europe
and Great Britain the main contributors. Europe continued to gain
share in spirits, taking 20bps over the year. Strong performance on
Johnnie Walker, Baileys and Captain Morgan continued. Tanqueray had
double digit growth in most countries across Europe and Guinness
net sales were up 2% supported by innovations from the ‘The Brewers Project’. Strong
performance in reserve brands continued with 9% growth. In Russia,
whilst the prior year price increases continued to impact
performance with volume down 4%, net sales grew 7% with share gains
in Bell’s and Johnnie Walker. In Turkey, volumes were down 2%
but net sales grew 4%, also driven by price rises following excise
increases. Gross margins were up across the three markets driven by
positive mix in Europe and price in Russia and Turkey. Operating
margin in the region increased 91bps driven mainly by positive
price/mix and ongoing productivity initiatives partially offset by
other one off operating costs.
|
Key financials £ million:
|
|
|
|
|
|
Acquisitions
and
disposals
|
|
|
|
|
Net
sales
|
2,544
|
211
|
37
|
(96)
|
128
|
2,824
|
11
|
|
Marketing
|
404
|
22
|
5
|
(2)
|
14
|
443
|
10
|
|
Operating
profit before exceptional items
|
801
|
64
|
14
|
(10)
|
67
|
936
|
17
|
|
Exceptional operating
items(ii)
|
-
|
|
|
|
|
(33)
|
|
|
Operating
profit
|
801
|
|
|
|
|
903
|
13
|
(i)
Reclassification
comprises changes to a reallocation of the results of the Travel
Retail operations to the geographical regions and the results of
Lebanon, other Middle Eastern and North African countries which
were formerly reported in Asia Pacific and Africa geographical
regions now being included in Europe, Russia and
Turkey.
(ii)
For further details
of exceptional operating items see notes 3.
|
Markets:
|
|
|
|
|
Global
giants and local stars(i):
|
|
|
|
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
Organic
volume
movement(ii)
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
|
|
|
|
|
|
|
|
|
|
Europe,
Russia
|
|
|
|
|
Guinness
|
2
|
2
|
10
|
|
and
Turkey
|
3
|
1
|
5
|
11
|
Johnnie
Walker
|
10
|
10
|
34
|
|
|
|
|
|
|
Smirnoff
|
(2)
|
(4)
|
2
|
|
Europe
|
3
|
-
|
4
|
9
|
Baileys
|
8
|
6
|
16
|
|
Russia
|
(4)
|
(4)
|
7
|
41
|
Yenì
Raki
|
(2)
|
4
|
5
|
|
Turkey
|
(2)
|
(2)
|
4
|
6
|
Captain
Morgan
|
14
|
12
|
23
|
|
|
|
|
|
|
JeB
|
2
|
-
|
14
|
|
Spirits
|
3
|
4
|
5
|
15
|
Tanqueray
|
33
|
29
|
43
|
|
Beer
|
2
|
(1)
|
2
|
10
|
|
|
|
|
|
Ready to
drink
|
(2)
|
(2)
|
(3)
|
5
|
|
|
|
|
(i)
Spirits
brands excluding ready to drink.
(ii)
Organic
equals reported volume movement except Johnnie Walker 19% and JeB
3% which were impacted by the reclassification of Middle Eastern
and North African countries to the region.
●
In Europe, net sales were up 4%:
●
In Great Britain, net sales grew 3%. Tanqueray grew
strong double digit due to expanded distribution, gaining share of
80bps in the gin category. Captain Morgan grew 6%, taking 300bps of
share and gained category leading status. Innovation success with
Hop House 13 Lager and Smirnoff Cider also contributed to growth
this year. Reserve brands were up 15% driven by Tanqueray and the
launch of Haig Club Clubman. Smirnoff gained share due to momentum
of the ‘We’re Open’ platform but net sales fell
7%, due to changes in the commercial footprint leading to
efficiencies including inventory reduction.
●
Net sales in
Ireland were flat. Guinness
net sales were up 2% driven by continued success of Hop House 13
Lager, offset by other beer brands where net sales declined 4%. Net
sales growth in spirits of 10% was driven by Gordon’s and
Smirnoff.
●
In France, net sales were flat. Continued
strong performance in Captain Morgan and Zacapa, was offset by
weakness in JeB and Smirnoff
including ready to drink.
●
In Continental Europe, net sales were up 7%:
●
Net sales in
Iberia were up 7% due to
changes in the commercial footprint in the prior year and scotch
share gain in a growing scotch category, with Johnnie Walker net
sales growth of 7% and JeB
returning to growth of 3%. Tanqueray net sales were up 9% in a
growing gin category.
●
In Germany, Austria and
Switzerland, net
sales grew 10% driven by double digit growth in Baileys,
Johnnie Walker and Tanqueray, all achieving share gains in their
respective categories.
●
Benelux net sales were down 2% within a
declining spirits category. Performance continued to be impacted by
a significant tax increase implemented in the prior year in
Belgium.
●
In Italy, net sales were up 5%, mainly due
to strong net sales growth in Tanqueray in a growing gin
category.
●
Poland net sales grew 9% due to
performance improvement in scotch and reserve brands.
●
Europe Partner Markets grew net sales
12% due to an expanded distribution footprint and performance
improvement in Johnnie Walker, Captain Morgan and
Guinness.
●
Russia net sales grew 7%. While
performance continues to be impacted by the economy and recent
history of price increases, Russia achieved double digit growth in
Bell’s and Johnnie Walker, with share gains across both
brands. Performance improved due to broader distribution in the
off-trade, increased activations and consistent execution of growth
drivers as well as innovation success with Bell’s
Spiced.
●
In Turkey, net sales grew 4% reflecting the
impact of price rises taken in response to increases in excise
duties. This performance was delivered in a challenging market,
driven by 5% growth in raki. Johnnie Walker continued to deliver
double digit growth.
●
Marketing increased 3% and benefited
from productivity initiatives which improved efficiency and
effectiveness of the brand investment. The region continues to be
focused on the key growth opportunities including reserve brands,
gin, scotch, beer and innovation with up-weighted spend in the
second half.
Africa delivered net sales growth of 5% with all markets
contributing to growth except East Africa, which remained flat.
East Africa performance was driven by mainstream spirits up 24%,
with strong growth of Kenya Cane offset by beer, down 4%, due to a
significant increase in duty in Kenya in December 2015. Africa
Regional Markets were up 5% driven by the relaunch of Meta in
Ethiopia and in Ghana, good growth of Guinness and Malta Guinness,
partially offset by a decline in Orijin due to increased
competition in the bitters category. Nigeria was up 16% as the beer
market continues to shift towards the value segment with
Satzenbrau, up 61%, capitalising on the trend. South Africa was up
7%, due to growth of Smirnoff 1818. Beer performance in the region
with net sales up 3%, was driven by Senator and Satzenbrau,
partially offset by Guinness down 5% and Tusker down 10%.
Mainstream spirits showed strong growth, up 21%. Scotch was up 5%
and in growth across all markets except South Africa, driven by
Johnnie Walker supported by the ‘Keep Walking’
campaign. Operating margin increased 60bps supported by
productivity savings in supply, zero based budgeting on indirect
spend and organisation effectiveness benefits, partially offset by
an increase in marketing spend and route to consumer
investments.
Key
financials £ million:
|
|
|
|
|
|
Acquisitions
and
disposals
|
|
|
|
|
Net
sales
|
1,401
|
78
|
(13)
|
15
|
75
|
1,556
|
11
|
|
Marketing
|
143
|
13
|
(2)
|
5
|
7
|
166
|
16
|
|
Operating
profit
|
212
|
7
|
(7)
|
(14)
|
20
|
218
|
3
|
(i)
Reclassification
comprises changes to a reallocation of the results of the Travel
Retail operations to the geographical regions and the results of
North African countries which were formerly reported in the Africa
geographical regions now being included in Europe, Russia and
Turkey.
|
Markets:
|
|
|
|
|
Global
giants and local stars(i):
|
|
|
|
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
Organic
volume
movement(ii)
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
|
|
|
|
|
|
|
|
|
|
Africa
|
3
|
3
|
5
|
11
|
Guinness
|
(5)
|
(5)
|
(7)
|
|
|
|
|
|
|
Johnnie
Walker
|
(1)
|
3
|
5
|
|
East
Africa
|
5
|
5
|
-
|
16
|
Smirnoff
|
4
|
22
|
47
|
|
Africa
Regional Markets
|
-
|
-
|
5
|
18
|
|
|
|
|
|
Nigeria
|
10
|
10
|
16
|
(16)
|
|
|
South
Africa
|
(1)
|
2
|
7
|
40
|
|
|
|
|
|
|
|
|
|
|
Malta
Guinness
|
(12)
|
2
|
(11)
|
|
Spirits
|
9
|
7
|
13
|
24
|
Tusker
|
(7)
|
(10)
|
5
|
|
Beer
|
1
|
1
|
3
|
4
|
Senator
|
10
|
14
|
32
|
|
Ready
to drink
|
(10)
|
3
|
(3)
|
14
|
Satzenbrau
|
22
|
61
|
18
|
(i)
Spirits
brands excluding ready to drink.
(ii)
Organic
equals reported volume movement except for Johnnie Walker (10)%
which was impacted by the reclassification of Algeria and Morocco
to the Europe, Russia and Turkey region.
●
In East Africa, net sales were flat. Beer was down 4%, driven by
the impact of the duty increase on bottled beer affecting Guinness
and Tusker, partially offset by growth in Senator of 14%. Growth in
value beers was supplemented by Ngule, a new value price point
innovation in Uganda. Spirits grew 17% driven by mainstream
spirits, up 24%. Reserve brands grew double digit following
enhanced outlet partnerships and activation supported by brand
ambassadors.
●
In Africa Regional
Markets, net sales grew 5%
reflecting strong growth in Ethiopia, and a solid contribution by
Ghana and Cameroon. These markets continued to benefit from the
enhanced route to consumer delivering improved distribution,
availability and execution.
o
In
Ethiopia, net sales increased 28% driven by Meta, up 23%, following
the relaunch last year. Spirits growth was fuelled by Johnnie
Walker strong double digit growth driven by the new distributor
model.
o
Ghana
net sales increased 4%. Growth in beer offset a decline in spirits
driven by Orijin Bitters which lapped its launch. Guinness net
sales were up 15% and Malta Guinness, up 14% both benefiting from
the ‘First Beer On Us’ campaign, offsetting declines in
other beer brands, predominantly Star.
o
In
Cameroon, net sales growth of 3% was driven largely by ready to
drink, up 42%. This was led by Orijin ready to drink following the
launch last year. Spirits also contributed to the good performance
driven predominately by Johnnie Walker Black Label, up 17%. Malta
Guinness declined due to rising competition in the
category.
●
In Nigeria, net sales increased 16% driven by beer growth up
11%. The beer value category continues to grow and now represents
more than 50% of the market volume. Satzenbrau with net sales up
61% and the Dubic Malt launch, more than offset the decline in
Guinness, Malta Guinness and Harp. Strong mainstream spirits growth
was driven by increased support and the successful launch of brands
including McDowell’s in the first half of the year, which is
now produced locally at Benin. Scotch net sales were up strong
double digit, driven by Johnnie Walker increased investment. Ready
to drink was down 15%, driven by the highly competitive category
affecting Orijin, partly offset by strong performance in Smirnoff
Double Black and Guarana and Smirnoff Ice. The recent launch of
Orijin Zero is extending reach into the non-alcoholic drinks
market.
●
South Africa
net sales grew 7% driven by growth in
mainstream spirits, up 15%, led by strong growth of Smirnoff 1818
which was partially offset by Guinness decline and scotch down 1%
with volume down 6% following the negative category trend and
impacted by price increases across the
portfolio.
●
Marketing was up 5% in the region. In Africa Regional
Markets investment was focused behind the activation of Guinness
campaigns and Johnnie Walker ‘Step up’ across all
markets, and in Ethiopia on the Meta relaunch. South Africa
investment was behind Johnnie Walker and Bell´s to revitalize
the scotch category with activations at scale through liquid on
lips. In Nigeria investment remained flat, with special focus on
Satzenbrau and mainstream spirits launches. East Africa investment
was focused on Johnnie Walker, while efficiencies on Tusker were
reinvested in mainstream spirits.
|
Latin America and Caribbean
|
Latin America and Caribbean delivered 2% growth in volume and 9%
growth in net sales, with strong performance from Mexico, Andean
and PEBAC. Mexico net sales were up 20% driven by scotch and strong
double digit growth from Don Julio. Andean performance was driven
by Colombia with net sales growth of 20%. Both Andean and PEBAC
growth was mainly driven by scotch. PUB grew net sales 4% as the
rate of decline in Brazil slowed due to lapping the impact of prior
year tax increases, and performance improvement in Uruguay and
Paraguay. Across the region, scotch net sales grew 12% and a
decline in vodka was offset by growth in tequila, Baileys and rum.
Operating margin for the region increased 111bps benefiting from
product mix in Mexico and Colombia, productivity led marketing
efficiencies and overhead savings through both indirect spend and
organisational effectiveness programmes.
|
Key financials £ million:
|
|
|
|
|
|
Acquisitions
and
disposals
|
|
|
|
|
Net
sales
|
863
|
131
|
(13)
|
(26)
|
89
|
1,044
|
21
|
|
Marketing
|
167
|
22
|
1
|
(2)
|
7
|
195
|
17
|
|
Operating
profit before exceptional items
|
199
|
35
|
(11)
|
(5)
|
32
|
250
|
26
|
|
Exceptional operating
items(ii)
|
(118)
|
|
|
|
|
-
|
|
|
Operating
profit
|
81
|
|
|
|
|
250
|
209
|
(i)
Reclassification
comprise changes to a reallocation of the results of the Travel
Retail operations to the geographical regions.
(ii)
For further details
of exceptional operating items see notes 3.
|
Markets:
|
|
|
|
|
|
Global giants and local stars(i):
|
|
|
|
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
Organic
volume
movement(ii)
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America and
|
|
|
|
|
Johnnie
Walker
|
2
|
11
|
23
|
|
Caribbean
|
2
|
2
|
9
|
21
|
Buchanan’s
|
19
|
23
|
32
|
|
|
|
|
|
|
Smirnoff
|
(2)
|
(10)
|
10
|
|
PUB
|
(3)
|
(3)
|
4
|
38
|
Old
Parr
|
(1)
|
3
|
20
|
|
Mexico
|
16
|
16
|
20
|
27
|
Baileys
|
8
|
15
|
28
|
|
CCA
|
(4)
|
(10)
|
(1)
|
1
|
Ypióca
|
1
|
5
|
41
|
|
Andean
|
(11)
|
(11)
|
21
|
39
|
Black
& White
|
46
|
21
|
40
|
|
PEBAC
|
43
|
46
|
13
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spirits
|
3
|
4
|
12
|
27
|
|
|
|
|
|
Beer
|
1
|
(29)
|
17
|
(36)
|
|
|
|
|
|
Ready
to drink
|
(16)
|
(17)
|
(3)
|
20
|
|
|
|
|
(i)
Spirits
brands excluding ready to drink.
(ii)
Organic
equals reported volume movement except for Smirnoff 4% and Baileys
9% due to the impact of disposed businesses.
●
In PUB (Paraguay, Uruguay and
Brazil), net sales grew 4%. In
Brazil, the decline in net sales slowed as performance lapped the
impact from the tax increase in December 2015. Net sales declined
in vodka and ready to drink, which offset the 4% growth in scotch,
where Black & White grew 28% gaining 11 percentage points share
of primary scotch. In cachaça, Ypióca net sales grew 5%
with Ypióca Ouro (Gold variant) growing double digit driven by
strong in store execution and commercial incentives. Paraguay and
Uruguay continued to grow due to improved performance in the export
channels. Net sales for reserve brands in PUB continued their
strong performance with 18% growth driven by Ketel One vodka and
Johnnie Walker Gold Label Reserve.
●
In Mexico, net sales increased 20% driven by strong
performance across all categories except ready to drink and vodka.
Scotch continues to be a key category driver with net sales growth
for Johnnie Walker at 16% and Buchanan’s at 14%. In primary
scotch, Black & White net sales grew double digit. Reserve grew
net sales 33% driven by Don Julio which grew 42% taking 2pps of
share. Net sales also grew in rum, Baileys and
gin.
●
In CCA (Central America and
Caribbean), net
sales declined 1%. The domestic markets grew net sales
3% driven by scotch, Smirnoff ready to drink and Guinness. Export
channels net sales declined 9% as market conditions remained
challenging given the continued currency weakness against the US
dollar.
●
Andean (Colombia and
Venezuela) continued strong
growth with net sales up 21%. Colombia net sales increased 20%
driven by route to consumer expansion and implementation of
commercial standards. Growth in Colombia was across all categories
except vodka with scotch up 23% driven by Buchanan’s and
Johnnie Walker continuing to grow our leadership position in the
category. In Venezuela volume decreased 27% as volatility in the
market continued. Although net sales grew significantly faster,
with price increases in the high inflation environment, the
business remains small with net sales of approximately
£10m.
●
PEBAC (Peru, Ecuador, Bolivia,
Argentina and Chile) delivered
net sales growth of 13%, mainly driven by Chile and Argentina.
Growth in Chile was driven by scotch. Argentina’s growth was
driven by a route to market change, implemented in
F16.
●
Marketing increased by 4%, and benefited from procurement
savings resulting in an underlying investment increase of 9%.
Investment on scotch was spread across price points with support
focused behind Johnnie Walker, Buchanan’s and Black &
White.
Asia Pacific net sales grew 3% with strong growth in Greater China
and solid performance in Australia and South East Asia. This was
partly offset by the continued contraction of the scotch category
in Korea which led to a further decline in net sales and there was
also weakness in travel retail in the region. In Greater China, net
sales grew 25% as a result of strong momentum in Chinese white
spirits and scotch performance, up 5%. The business in India grew
net sales by 2%, largely driven by IMFL whisky and scotch, despite
the impact of demonetisation and the Supreme Court ruling banning
sales in certain outlets near state highways. South East Asia net
sales grew 3% and Australia net sales also grew 3% driven by scotch
and ready to drink innovation. Operating margin improved 20bps
benefiting from mix, driven by strong growth from reserve brands,
overhead effiiciency benefits from the productivity programme
across all markets, and in India, margin improvement was supported
in particular by significant supply efficiencies. These benefits
were partially offset by lapping the profit on the sale of United
Breweries shares in the prior year.
|
Key financials £ million:
|
|
|
|
|
|
Acquisitions
and
disposals
|
|
|
|
|
Net
sales
|
2,076
|
346
|
(30)
|
(43)
|
70
|
2,419
|
17
|
|
Marketing
|
301
|
47
|
(4)
|
-
|
(1)
|
343
|
14
|
|
Operating
profit before exceptional items
|
395
|
85
|
(11)
|
(1)
|
19
|
487
|
23
|
|
Exceptional operating
items(ii)
|
(49)
|
|
|
|
|
(9)
|
|
|
Operating
profit
|
346
|
|
|
|
|
478
|
38
|
(i)
Reclassification
comprises changes to a reallocation of the results of the Travel
Retail operations to the geographical regions and the results of
Lebanon, other Middle Eastern countries which were formerly
reported in the Asia Pacific geographical region now being included
in Europe, Russia and Turkey.
(ii)
For further details
of exceptional operating items see notes 3.
|
Markets:
|
|
|
|
|
|
Global giants and local stars(iii):
|
|
|
Organic
volume
movement(i)
|
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
Organic
volume
movement(iv)
|
Organic
net
sales
movement
|
Reported
net
sales
movement
|
|
|
|
|
|
|
|
|
|
|
|
Asia
Pacific
|
(1)
|
(6)
|
3
|
17
|
Johnnie
Walker
|
3
|
1
|
7
|
|
|
|
|
|
|
McDowell's
|
(1)
|
1
|
13
|
|
India
|
(2)
|
(7)
|
2
|
14
|
Windsor
|
(11)
|
(12)
|
5
|
|
Greater
China
|
25
|
25
|
25
|
45
|
Smirnoff
|
(1)
|
1
|
17
|
|
Australia
|
-
|
-
|
3
|
25
|
Guinness
|
-
|
(1)
|
18
|
|
South
East Asia
|
7
|
13
|
3
|
15
|
Bundaberg
|
(4)
|
-
|
21
|
|
North
Asia
|
11
|
11
|
(3)
|
18
|
Shui Jing Fang(v)
|
66
|
65
|
81
|
|
Travel
Retail Asia and Middle East
|
(14)
|
(17)
|
(13)
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spirits
|
(1)
|
(7)
|
4
|
16
|
|
|
|
|
|
Beer(ii)
|
1
|
46
|
-
|
17
|
|
|
|
|
|
Ready
to drink
|
-
|
-
|
-
|
20
|
|
|
|
|
(i)
Difference
between organic and reported volume for Asia Pacific is driven by
the move to the franchise model for some popular segment brands in
India.
(ii)
Following
a review of group’s reporting of volume an adjustment was
made to include Malaysia and Singapore contract brew volume in the
reported beer figures which increased the reported volume in Asia
Pacific by 0.3 million equivalent cases (2016 – 0.4 million
equivalent cases).
(iii)
Spirits
brands excluding ready to drink.
(iv)
Organic
equals reported volume movement except for Johnnie Walker (2)%,
Smirnoff (2)% and McDowell’s (7)% which were impacted by the
reclassification of Lebanon and other Middle East countries to the
Europe, Russia and Turkey region and the move from an owned to a
franchise model in India.
(v)
Organic
growth figures represent total Chinese white spirits of which Shui
Jing Fang is the predominant brand.
●
India net sales were up 2% despite the impact of
demonetisation and the recent Supreme Court ruling prohibiting the
sale of alcohol in certain outlets near state highways. Prestige
and above grew 7% as McDowell’s No. 1 and Signature continued
to benefit from their renovation, with net sales growth of 9% and
31%, respectively. Scotch grew net sales 6% driven by Johnnie
Walker and Black & White. Popular brands declined 5%
particularly within the rum category. The focus on route to
consumer continues with perfect stores now representing over a
third of total business. Distribution and share of shelf have
grown, driving net sales growth and share on key scotch
brands.
●
Greater China
net sales were up 25%. Chinese white
spirits grew 69%, driven by route to consumer initiatives and brand
equity investment. Scotch net sales growth was up 5% driven by
Johnnie Walker, The Singleton and other malts.
●
Australia net sales increased 3% driven by growth in scotch.
The relaunch of the Johnnie Walker ‘Keep Walking’
campaign and innovations including blender’s batch select
cask and red rye finish contributed to Johnnie Walker net sales
growth of 4%. Reserve was up 9%. Whilst the ready to drink category
remains challenging, innovation launches including Bundaberg Lazy
Bear, Smirnoff Pure and Pimm’s Premixes, delivered
significant net sales for the business through addressing consumer
demand for low tempo refreshing drinks.
●
South East Asia
net sales grew 3% with growth in the
Philippines and Key Accounts offsetting the declines in Thailand
and Indonesia. In the Philippines the focus on route to consumer is
driving significant increases in distribution in the modern trade
and secondary outlets, while also improving execution standards and
activation. The ‘Keep Walking Philippines’ campaign
launch during the first half supported by occasion-driven
activation during the second half led to double digit growth for
Johnnie Walker. Scotch grew net sales 7% driven by Key Accounts,
which continues to lap a period of planned inventory reduction, and
the Philippines. The mourning period in Thailand, following the
death of the king, impacted performance with net sales down 10%
following the closure of on-trade outlets for varying periods over
the one year formal mourning period. In Indonesia, total beer net
sales declined 5% impacted by structural trade changes. Guinness
decline was mitigated by the launch of Ginseng under the Guinness
Zero brand.
●
In North Asia, net sales declined 3%. In Korea net sales declined
7% as Windsor continued to be impacted by the contraction of the
traditional on-trade, increased competition and shifts to lower
alcohol by volume local whisky segments. This was partially offset
by net sales growth of 41% for W Ice by Windsor, a low alcohol
variant and by Guinness as the international beer category grows.
Japan grew net sales 6% driven by scotch with net sales growth of
21% offsetting the decline in ready to drink.
●
Travel Retail Asia and Middle
East continued to decline net
sales at 13% with lower spend by travellers and currency volatility
impacting performance.
●
Marketing investment remained broadly flat with marketing
efficiencies across the region offset by up-weighted investment
behind Chinese white spirits.
CATEGORY AND BRAND REVIEW
For the
year ended 30 June 2017
|
|
Organic
volume
movement(iii)
%
|
Organic
net
sales
movement
%
|
Reported
net
sales
movement
%
|
|
Spirits(i)
|
1
|
5
|
19
|
|
Scotch
|
4
|
5
|
18
|
|
Vodka(ii)
|
(2)
|
(4)
|
10
|
|
North
American whisk(e)y
|
8
|
11
|
29
|
|
Rum(ii)
|
(2)
|
4
|
19
|
|
Indian-Made
Foreign Liquor (IMFL) whisky
|
1
|
6
|
21
|
|
Liqueurs
|
4
|
3
|
12
|
|
Gin(ii)
|
8
|
8
|
20
|
|
Tequila
|
27
|
26
|
43
|
|
Beer
|
1
|
2
|
7
|
|
Ready to drink
|
(4)
|
-
|
17
|
(i)
Spirits
brands excluding ready to drink.
(ii)
Vodka,
rum, gin including IMFL brands.
(iii)
Organic
equals reported volume movement except for Spirits (2)%, Rum (6)%,
IMFL whisky (2)%, Liqueurs 1%, Gin 3% and Ready to drink 0% which
were impacted by disposals and the move from an owned to a
franchise model in India.
●
Scotch represents 25% of Diageo’s
net sales and was up 5% with broad based growth across all regions
except Asia Pacific which was impacted by Windsor decline in line
with the scotch category contraction in Korea. This was more than
offset by growth driven by Johnnie Walker up 6% and
Buchanan’s up 16%. Performance was consistently strong across
all price segments, growing net sales in standard and primary from
brands such as Johnnie Walker Red Label up 6% and Black & White
up 16%. Premium segments grew 5% with Buchanan’s continuing
to perform strongly in Latin America and Caribbean and North
America. Scotch reserve brands grew net sales 4%, driven by Johnnie
Walker Gold Label Reserve and The Singleton up 8%.
●
Vodka represents 12% of Diageo’s
net sales and declined 4%, driven by soft performance in all the
regions except for Africa where net sales grew 22%. Net sales
decline was driven predominantly by Cîroc and Ketel One vodka in North
America. Smirnoff declined 1%. This was driven by Great Britain,
where despite gaining share, it was impacted by changes to the
commercial footprint that led to efficiencies, including an
inventory reduction, and declined 7%. Smirnoff was also down 2% in
US Spirits, partially offset by a strong growth of Smirnoff 1818 in
South Africa.
●
North American whisk(e)y represents 9%
of Diageo’s net sales and grew 11%. Performance continued to
be driven by strong growth and share gains in Crown Royal and
Bulleit in US Spirits.
●
Rum represents 7% of Diageo’s net
sales and grew 4%. In Europe, Africa and Latin America and
Caribbean net sales grew double digit while North America was up
3%, driven by the turnaround of Captain Morgan. In India net sales
declined 8% driven by McDowell's No.1 Rum.
●
IMFL whisky represents 5% of
Diageo’s net sales and grew 6%. The relaunches of two of the
biggest brands McDowell’s No.1 and Signature have contributed
to this growth with both brands growing double digit.
●
Liqueurs represents 5% of Diageo’s
net sales and grew 3% driven by growth in all regions except
Africa. Baileys was up 5%, led by Europe, following an exceptional
on-trade execution and positive results of the ‘Don’t
mind if I Baileys’ advertising campaign.
●
Gin represents 3% of Diageo’s net
sales and grew 8%. Strong double digit growth in Europe, Africa and
Latin America and Caribbean fuelled growth in the category.
Tanqueray was the largest contributor, followed by
Gordon´s.
●
Tequila represents 2% of Diageo’s
net sales and grew 26%. The performance was driven by continued
double digit growth of Don Julio in US Spirits and
Mexico.
●
Beer represents 16% of Diageo’s
net sales and grew 2%. Strong performance in the value beer
portfolio in Africa was driven by Satzenbrau in Nigeria and Senator
in Kenya. Guinness growth in Europe was led by innovation from the
‘The Brewers Project’ including Guinness Hop House 13
Lager. This was offset by declines in Tusker and Guinness Extra
Stout as a result of the increase of duty on bottled beer in Kenya
as well as a decline in Guinness in Nigeria.
●
Ready to drink represents 6% of
Diageo’s net sales and remained flat. North America delivered
strong performance in Smirnoff launches offset predominantly by
declines in Orijin in Nigeria.
|
Global giants, local stars and reserve(i):
|
|
|
Organic
volume
movement(ii)
%
|
Organic
net
sales
movement
%
|
Reported
net
sales
movement
%
|
|
Global giants
|
|
|
|
|
Johnnie
Walker
|
4
|
6
|
18
|
|
Smirnoff
|
(1)
|
(1)
|
13
|
|
Baileys
|
6
|
5
|
18
|
|
Captain
Morgan
|
7
|
6
|
22
|
|
Tanqueray
|
12
|
9
|
24
|
|
Guinness
|
(1)
|
-
|
8
|
|
Local stars
|
|
|
|
|
Crown
Royal
|
10
|
12
|
30
|
|
Yenì
Raki
|
(3)
|
4
|
5
|
|
Buchanan’s
|
16
|
16
|
29
|
|
JeB
|
3
|
-
|
13
|
|
Windsor
|
(11)
|
(12)
|
5
|
|
Old
Parr
|
-
|
5
|
22
|
|
Bundaberg
|
(4)
|
-
|
21
|
|
Black
& White
|
24
|
16
|
37
|
|
Ypióca
|
1
|
5
|
41
|
|
McDowell's
|
(1)
|
2
|
15
|
|
Shui Jing Fang(iii)
|
66
|
65
|
81
|
|
Reserve
|
|
|
|
|
Scotch
malts
|
3
|
2
|
17
|
|
Cîroc
|
(10)
|
(12)
|
1
|
|
Ketel
One vodka
|
-
|
(5)
|
11
|
|
Don
Julio
|
25
|
25
|
43
|
|
Bulleit
|
23
|
24
|
44
|
(i)
Spirits
brands excluding ready to drink.
(ii)
Organic
equals reported volume movement except for McDowell’s No.1
(6)%, which was impacted by the move from an owned to a franchise
model in India.
(iii)
Organic
growth figures represent total Chinese white spirits of which Shui
Jing Fang is the predominant brand.
●
Global Giants represent 41% of Diageo net sales and grew 3%,
driven by Europe up 6% and Latin America and Caribbean up 9%. All
Global Giants grew with the exception of Guinness which remained
flat and Smirnoff which was down 1%.
●
Johnnie Walker net sales were up 6% with growth in all regions.
Latin America and Caribbean and Europe were the largest
contributors with 11% and 9% growth, respectively. North America
was up 6%, accelerating growth in the second half. In Asia Pacific,
net sales grew 1%, with growth driven by South East Asia, China and
India partially offset by Travel Retail Asia and Middle East.
Reserve variants grew 6% driven by Johnnie Walker Gold Label
Reserve and Johnnie Walker Green Label.
●
Smirnoff net sales were down 1%.
Declines in US Spirits, Europe and Latin America and Caribbean were
partly offset by Asia Pacific up 1%, and Africa growth up 22%
driven by the strong performance of Smirnoff 1818 in South Africa.
The decline in Europe was driven by Great Britain, Benelux and
France performance, partly offset by Iberia up 16% and Ireland up
9%.
●
Baileys net sales grew 5% across all
regions driven by 6% growth in its biggest market, Europe,
following an exceptional on-trade execution. Latin America and
Caribbean contributed with double digit growth behind Mexico
Mother´s Day shopper platform and North America contributed
with brand innovations.
●
Captain Morgan net sales grew 6% across
all regions, with a strong performance in Europe driven by Europe
Partner Markets, France and Great Britain. In US Spirits net sales
grew 4% and gained share, supported by innovation.
●
Tanqueray net sales grew 9% across all
regions except for North America. Europe led the growth with strong
double digit growth driven by Great Britain, Italy and Germany,
Austria and Switzerland.
●
Guinness net sales were flat. Africa
declined 5% largely driven by the shift to value beer in Kenya and
Nigeria partially offset by growth in Europe and Africa Regional
Markets. Guinness in Europe grew 2% driven by expansion of
distribution in Europe Partner Markets supported by media
investment and the success of Hop House 13 Lager in Great Britain
and Ireland.
●
Local stars represent 20% of net sales
and grew 9%. This was driven by Crown Royal in North America
growing 12%, Buchanan’s up 16% and double digit growth in
Chinese white spirits. Solid growth in Yenì Raki in Turkey and
McDowell’s more than offset the declines in Windsor in Korea.
Black & White growth of 16% was driven by Latin America and
Caribbean and Asia Pacific.
●
Reserve brands represent 16% of net
sales and grew 7%, across all regions. Chinese white spirits and
strong performance in Don Julio growth in US Spirits and Mexico
were partly offset by Cîroc and Ketel One vodka declines in
US Spirits. Scotch reserve brands grew 4% with Johnnie Walker
driving the growth. Bulleit continued its strong growth with net
sales up 24%. Tanqueray No. TEN grew strong double digit, up 25%.
Malts up 2%, was driven by Lagavulin in North America and The
Singleton in Asia Pacific and North America.
ADDITIONAL FINANCIAL INFORMATION
For the
year ended 30 June 2017
|
|
|
|
Acquisitions
and disposals
(b)
|
|
|
|
|
|
|
|
|
|
|
Sales
|
15,641
|
1,978
|
(332)
|
827
|
18,114
|
|
Excise
duties
|
(5,156)
|
(619)
|
50
|
(339)
|
(6,064)
|
|
Net sales
|
10,485
|
1,359
|
(282)
|
488
|
12,050
|
|
Cost
of sales
|
|