Diageo hit by first post-Covid sales fall but Guinness soars in Great Britain

Global sales at the drinks multinational Diageo have declined for the first time since the Covid pandemic, although Great Britain bucked the trend thanks to a rise in the popularity of Guinness and related drinks.

Sales increased 5% in Great Britain, a rise credited to the rise in popularity of the Irish stout and spin-offs such as an alcohol-free version and its Nitrosurge home-pouring technology.

Diageo said overall sales of its beer brands grew 18% globally over its last fiscal year, primarily driven by Guinness. Great Britain and Ireland provided the biggest boost to the leading brand, and sales of the non-alcoholic Guinness 0.0 more than doubled year on year globally.

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However, sales of spirits declined 1% across Diageo’s European markets. Strong growth in raki and Baileys was more than offset by the falling popularity of its scotch, gin and rum portfolio.

Shares fell 9% to a four-year low at one point on Tuesday after the sales figures were released.

The company said that over the last financial year it had increased its spend on marketing by 4%, with a focus on tequila, beer and its Johnnie Walker brand.

Diageo said sales across Europe grew 3% at an organic level, driven by double-digit percentage growth in Turkey and mid-single-digit growth in Great Britain and Ireland.

“Diageo Europe delivered a strong performance with market share growth across most European markets despite persistent cost inflation and lower consumer confidence,” the company said.

However, total net sales fell 1.4% to $20.3bn and annual operating profit was down 4.8% to $304m, of which the company blamed $302m on the Latin American and Caribbean region. Last autumn Diageo said economic pressures in the region had pushed consumers to drink less and switch to cheaper options .

The Diageo chief executive, Debra Crew, said the company had taken steps to resolve its problems in the region and improve its performance elsewhere. “We are confident that when the consumer environment improves, the actions we are taking will return us to growth,” she said.

In North America sales declined 2% as consumers cut back on drinking tequila, sales of which fell by 5%. The company’s Casamigos brand experienced a 22% fall in sales but its stablemate Don Julio grew by 22%. Sales of vodka fell 8% by in North America.

Crew said it was “hard to call” when Diageo would be able to meet its medium-term sales target, adding that this was affected by factors such as high inflation and consumer confidence.