Competitor Monitoring: Price Increases, Premium Products Drive Growth At Diageo

Drinks giant Diageo has reported strong sales growth for its H2, 2012. The performance was helped by price increases and growth of premium brands such as Ketel One vodka and Bulleit Bourbon in the US.

Sales increased by 5 per cent to £6.04 billion in the second half of 2012 while pre-tax profit rose 5 per cent to £1.96 billion. European sales fell by 2 per cent. Meanwhile, underlying sales in North America grew by 5% assisted by price increases and growth in premium brands. Underlying sales in Asia rose 6 per cent.

"Our expanding reach to emerging middle class consumers in faster growing markets was the key driver of our volume growth, while net sales growth was driven by our pricing strategy and premiumisation, especially in the US," said Paul Walsh, chief executive of Diageo. This drove gross margin expansion, which together with the continued focus on operating efficiencies, delivered operating margin improvement.

© 2013 Profitero

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