Diageo’s sales fall in six months to December 2020

United Kingdom | The world’s major drinks company, Diageo, reported net sales of GBP 6.9 billion (USD 9.4 billion) in the six months to 31 December 2020, down 4.5 percent over the same period in 2019. According to Diageo, organic growth of 1 percent during the first half was offset by “unfavourable exchange rates”.

The company said that operating profit for the six-month period dropped 8.3 percent to GBP 2.2 billion (USD 3 billion).

Spirits and beer sales drop

Diageo’s business continues to be impacted by on-premise restrictions and the reduction in global travel. This hurt beer and scotch sales in particular.

Spirits sales declined 2 percent, hit by a 13 percent drop in Scotch whisky sales due to reduced international travel, particularly in the Asia Pacific region. Johnnie Walker’s organic sales fell 12 percent.

Diageo’s beer sales suffered far worse: overall, beer sales, which represented 15 percent of group sales, dropped 9 percent by volume and 16 percent in reported net sales.

The picture at Guinness was even bleaker: global sales of the stout were down 11 percent by volume and 20 percent in reported net sales.

Diageo’s CEO, Ivan Menezes, commented: “We delivered a strong performance in a challenging operating environment, returning to top-line organic sales growth during the half. We rapidly pivoted to the channels and occasions most relevant to consumers and invested behind new opportunities. This more than offset the impact of on-premise restrictions and the decline in travel retail.”

Looking to the second half of fiscal year, Mr Menezes said the firm expects “ongoing volatility and disruption”, mainly in the on-premise.