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Diageo reports challenging year - sales up
Our Bureau
Date of posting: 27-08-10
      Diageo, the worlds largest maker of spirits with brands like Johnnie Walker and Smirnoff, has reported its preliminary results for the year 2010 which ended on June 30. According to that, sales increased to 9.8 billion Ponds (12 billion Euro) by 5%, and operating profit by 6% to 2.6 nillion pounds.

      "As expected this has been a year of challenges and opportunities", said Paul Walsh, Chief Executive of Diageo. "Our performance was much stronger in the second half than in the first: our performance in the developing markets drove overall growth while markets in North America and Europe remained weak".

      Volumes wer down by 2% in North America and sales decreased by 3%. Asia Pacific returned to net sales growth in the second half, driven mainly by the strong performance of Johnnie Walker but with improved performance across all global priority brands. Double-digit growth in South East Asia and strong growth in Taiwan and Thailand offset destocking in India, further weakness of the premium spirits segment in Japan and a decline in scotch in Korea.

      The business in India was impacted by destocking in the first half following inappropriate shipments in the prior year. As a result, both volume and net sales were down. Marketing spend as a percentage of net sales was also below last year, as the business was rebased. Marketing spend was focused behind Johnnie Walker, Smirnoff and Vat 69 and investment behind sales capabilities accelerated. Price increases on Smirnoff and Vat 69 in the second half delivered price/mix improvement.

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