Diageo PLC (LON:DGE) delivers strong performance while investing in sustainable long-term growth.
Delivered strong net sales and operating profit growth within medium-term guidance
– Reported net sales of £17.1 billion, increased 10.7%, primarily reflecting strong organic net sales growth, and favourable impacts from foreign exchange.
– Organic net sales grew 6.5%. Price/mix of 7.3 percentage points reflects a high single-digit contribution from price and premiumisation.
– Reported volume declined by 7.4%, and organic volume declined by 0.8%.
– Growth reflects our advantaged portfolio of strong brands, diversified footprint, and premiumisation.
Resilient operating margin despite increased cost inflation
– Reported operating profit grew 5.1% to £4.6 billion. Reported operating margin declined by 147bps, with organic margin expansion more than offset by exceptional operating items and foreign exchange.
– Organic operating profit grew 7.0% and organic operating margin expanded by 15bps, driven by disciplined cost management. Price increases more than offset the absolute cost inflation impact on gross margin.
Advantaged portfolio and premiumisation drove market share growth
– Growth in organic net sales was delivered across most categories, particularly in our three largest categories: scotch, tequila and beer.
– Premium-plus brands comprised 63% of reported net sales, a 7 percentage point increase from fiscal 19.
– Total trade market share grew or held in over 70%(1) of total net sales value in measured markets.
Optimisation of portfolio through acquisitions and disposals
– Acquired Mr Black, a leading Australian premium coffee liqueur, Balcones Distilling, a Texas craft distiller and one of the leading producers of American single malt whiskey and Don Papa Rum, a super-premium, dark rum from the Philippines.
– Completed the sale of Guinness Cameroun S.A., disposed of Archers and completed the disposal and franchising of a portfolio of brands in India.
Invested to sustain long-term growth
– Increased organic marketing investment by 5.6%, reflecting strong, consistent investment in our brands.
– Invested £1.2 billion of capital expenditure (capex) in supply capacity, sustainability, digital capabilities and consumer experiences.
Continued cash flow generation and strong balance sheet
– Net cash flow from operating activities declined £0.9 billion to £3.0 billion.
– Free cash flow of £1.8 billion, declined £1.0 billion as strong growth in operating profit and favourable foreign exchange impacts were more than offset by higher year-on-year working capital outflows, tax and interest payments, and capital investment. Increased working capital reflects normalisation of creditors relative to fiscal 22 as our growth rate moderated in fiscal 23.
– Strong balance sheet, with leverage ratio(2) of 2.6x as at 30 June 2023, at the lower end of our target range, as a result of strong operating profit performance.
Continued progress in delivering Society 2030: Spirit of Progress ESG goals and doing business the right way
– Continued to reduce our absolute Scope 1 and 2 greenhouse gas emissions, achieving a further 5.4% reduction versus fiscal 22 and a cumulative 14.7% improvement from our 2020 baseline.
– SMASHED programme now live in 38 countries, and educated over 1.9 million young people, parents and teachers on the impact of underage drinking in fiscal 23, bringing the total to more than 3.7 million to date.
Continued creation of long-term shareholder value
– Increased basic eps by 17.6% to 164.9 pence and pre-exceptional eps by 7.6% to 163.5 pence.
– Increased recommended final dividend by 5% to 49.17 pence per share.
– Annualised total shareholder return was -2%, mainly driven by lower year-on-year share price. Total shareholder return, for the 5-year and 10-year periods of 7% and 9% respectively, remains strong.
– Completed a total of £1.4 billion return of capital in fiscal 23, which included £0.9 billion related to the completion of our £4.5 billion multi-year programme, and returned an additional £0.5 billion during the second half. Today we announced a new return of capital programme of up to $1 billion.
– Starting in fiscal 24, in line with reporting requirements the functional currency of Diageo plc has changed from sterling to the US dollar. Diageo has also changed its presentation currency to US dollar.(3)
See page 48 for explanation and reconciliation of non-GAAP measures, including organic net sales, organic marketing investment, organic operating profit, free cash flow, eps before exceptionals, ROIC, adjusted net debt, adjusted EBITDA and tax rate before exceptional items.
(1)Internal estimates incorporating Nielsen, Association of Canadian Distillers, Dichter & Neira, Frontline, INTAGE, IRI, ISCAM, NABCA, Scentia, State Monopolies, TRAC, IPSOS and other third-party providers. All analysis of data has been applied with a tolerance of +/- 3 bps. Percentages represent percent of markets by total Diageo net sales contribution that have held or gained total trade share fiscal year to date. Measured markets indicate a market where we have purchased any market share data. Market share data may include beer, wine, spirits or other elements. Measured market net sales value sums to 87% of total Diageo net sales value in fiscal 23. Effective fiscal 23, market share now reflects total on and off trade.
(2)Ratio of adjusted net borrowings to adjusted EBITDA. For further details see page 57.
(3)For further details, please see pages 7-8 and 47.
Debra Crew, Chief Executive, said:
We have delivered strong fiscal 23 full-year results, with organic net sales growth of 6% and organic operating profit growth of 7%, both within our medium-term guidance. We expanded organic operating margin by 15 basis points in a challenging cost environment while continuing to invest in the business. These results demonstrate Diageo’s ability to consistently deliver resilient performance, even in challenging macro environments. I want to thank my colleagues, nearly 30,000 globally, for their dedication, creativity and agility in delivering these results. I am also proud of how our Diageo family has come together in recent weeks following the loss of our much loved and respected former CEO, Sir Ivan Menezes.
In fiscal 23, we drove double-digit organic net sales growth in scotch, tequila, and Guinness, with our premium-plus brands contributing 57% of overall organic net sales growth. We delivered strong growth in four of our five regions, with Europe and Asia Pacific growing double-digit. North America delivered stable performance as the US spirits industry continued to normalise post-pandemic, and we lapped strong comparators, particularly in the second half of fiscal 23. Globally, we gained or held share in over 70%(1) of total net sales value in our measured markets in fiscal 23.
Our culture of everyday efficiency and strong pipeline of productivity initiatives drove £450 million of savings in fiscal 23, fuelling sustained investment in brand building. Our revenue growth management capabilities, deep consumer insights, and smart reinvestment enabled us to take strategic pricing actions with precision and effectiveness. Through free cash flow delivery, we increased our capital expenditure, acquired a number of brands to strengthen our exposure to attractive categories and bolstered our investment in maturing stock in fiscal 23, positioning us well for sustainable, long-term growth.
Looking ahead to fiscal 24, I expect operating environment challenges to persist, with continued cost pressure and ongoing geopolitical and macroeconomic uncertainty. This requires us to move with greater speed and agility. My near term opportunities to drive the business focus on bolder and faster innovation, stepping up operational excellence to meet consumers’ evolving tastes and preferences while driving scotch, tequila and Guinness.
Fiscal 24 marks the start of Diageo’s next stage of evolution, and it is an incredible privilege to be leading the company through it. I believe total beverage alcohol (TBA) is an attractive sector underpinned by strong consumer fundamentals, including population growth, increased spirits penetration, and resilience in premiumisation globally. I see a long runway of future growth opportunities for Diageo to go after with our winning strategy. And, I firmly believe we have an advantaged portfolio to capitalise on, to drive sustainable long-term growth and generate value for shareholders. I am excited to work with our teams around the world to capture the opportunities ahead.
(1)Internal estimates incorporating Nielsen, Association of Canadian Distillers, Dichter & Neira, Frontline, INTAGE, IRI, ISCAM, NABCA, Scentia, State Monopolies, TRAC, IPSOS and other third-party providers. All analysis of data has been applied with a tolerance of +/- 3 bps. Percentages represent percent of markets by total Diageo net sales contribution that have held or gained total trade (on and off trade) share fiscal year to date. Measured markets indicate a market where we have purchased any market share data. Market share data may include beer, wine, spirits or other elements. Measured market net sales value sums to 87% of total Diageo net sales value in fiscal 23. Effective fiscal 23, market share now reflects total on and off trade.
(2)See page 48 for explanation and reconciliation of non-GAAP measures.
(3)Includes recommended final dividend of 49.17p.
Fiscal 23 to fiscal 25 medium-term guidance
Organic net sales and organic operating profit
We believe in the fundamental strength of our business and expect our advantaged portfolio to benefit from international spirits continuing to gain share of TBA, premiumisation, and continued investment in marketing and innovation. Our portfolio is well-positioned across categories, geographies and price points. We will use our deep understanding of consumers to quickly adapt to changes in trends and behaviours while investing in marketing and innovation and leveraging our revenue growth management capabilities, including strategic pricing actions.
We continue to expect to deliver our medium-term guidance of consistent organic net sales growth in the range of 5% to 7% and sustainable organic operating profit growth in the range of 6% to 9%.
Fiscal 24 outlook
Organic net sales growth
In fiscal 23, strong net sales growth in the first half was followed by moderation in the second half. In the first half of fiscal 24, despite a tougher comparator, we expect gradual improvement from the second half of fiscal 23. We expect our organic net sales growth to accelerate in the second half of fiscal 24, given the softer comparator.
Organic operating profit growth
In a challenging, albeit moderating, inflationary environment, we will continue to focus on revenue growth management, including strategic pricing actions and everyday efficiency. We continue to expect organic operating margin to benefit from premiumisation trends and operating leverage while investing strongly in marketing. In line with organic net sales growth, we expect organic operating profit growth in fiscal 24 to improve from the second half of fiscal 23 and accelerate gradually through fiscal 24.
Taxation
We expect the tax rate before exceptional items to be in the region of 24% in fiscal 24.
Effective interest rate
We expect the effective interest rate to be just above 4% in fiscal 24.
Supply Chain Agility Programme
In July 2022, we announced our five-year programme to build a more agile and sustainable business by strengthening our end-to-end supply chain and making it fit for the future while driving productivity savings. The total implementation cost is expected to be up to $650 million (£500 million) which will comprise non-cash items and one-off expenses, the majority of which are expected to be recognised as exceptional operating items. The programme commenced in fiscal 23, and an exceptional charge was accounted for primarily relating to accelerated depreciation of assets and impairment of property, plant, and equipment directly attributable to the programme in North America and in India. Please see page 34 for details.
We expect the savings delivered from the supply chain agility programme to be incremental to our ongoing annual gross productivity savings (expected to be around $1.5 billion (£1.2 billion) in the period from fiscal 22 to fiscal 24). The programme is expected to have a five-year payback period, with most savings delivered in fiscal 25 and beyond.
Capital expenditure and free cash flow
In fiscal 24, we continue to expect capital expenditure for the full year to be in the range of $1.3-1.5 billion (£1.0-1.2 billion). We expect these levels of spend to continue in the coming years, but then decline again to historic levels as a percentage of net sales starting in fiscal 27. We expect cash flow to grow organically in fiscal 24 while we continue to invest in maturing stock to support long-term sustainable growth.
Functional/presentation currency
Starting 1 July 2023, in line with reporting requirements the functional currency of Diageo plc has changed from sterling to US dollar which is applied prospectively. This is because the group’s share of net sales and expenses in the United States and other countries whose currencies correlate closely with the US dollar has been increasing over the years, and that trend is expected to continue in line with the group’s strategic focus. Diageo has also decided to change its presentation currency to US dollar with effect from 1 July 2023, applied retrospectively, as it believes that this change will provide better alignment of the reporting of performance with its business exposures.
Commencing with the interim dividend to be declared in January 2024 (subject to approval of changes to the Articles of Association to be proposed at the 2023 Annual General Meeting), Diageo’s future dividends will be declared in US dollar and remain in line with the group’s existing progressive dividend policy. Holders of ordinary shares will continue to receive their dividends in sterling but will have the option to elect to receive their dividends in US dollar instead. Holders of American Depositary Receipts (ADR) will continue to receive dividends in US dollar.
Selected historical financial information included in the consolidated financial statements of Diageo for the years ended 30 June 2023, 30 June 2022 and 30 June 2021, and for the six months ended 31 December 2022 and 31 December 2021 (collectively the ‘Re-presented Financial Information’) will be re-presented in US dollar and made available on Diageo’s Investor Relations website in advance of the company’s first half fiscal 24 results announcement.
Notes to the business and financial review
Unless otherwise stated:
– movements in results are for the year ended 30 June 2023 compared to the year ended 30 June 2022;
– commentary below refers to organic movements unless stated as reported;
– volume is in millions of equivalent units (EUm);
– net sales are sales after deducting excise duties;
– percentage movements are organic movements unless stated as reported;
– growth is organic net sales movement unless states otherwise; and
– share refers to value share, except for India which is volume share.
See page 48 for explanation of the calculation and use of non-GAAP measures.
Business review
North America
• Reported net sales grew 11%, primarily driven by a favourable foreign exchange impact from the strengthening US dollar.
• Organic net sales were flat as growth in Canada and Diageo Beer Company USA (DBC USA) were offset by a decline in US Spirits.
• Strong price/mix growth was offset by a decline in volume, while the region held share of TBA.
• US Spirits net sales declined 1%, lapping strong double-digit growth impacted by distributor stock replenishment and increased inventories of imported products in fiscal 22. Depletion growth was approximately two percentage points ahead of shipment growth in fiscal 23, with some variation across brands. Overall inventory levels at distributors at the end of fiscal 23 were in line with historical levels.
• DBC USA net sales grew 1% reflecting strong growth in Guinness, partially offset by a decline in Smirnoff flavoured malt beverages.
• Organic operating margin declined by 101bps, primarily driven by cost inflation and an adverse category mix. Strategic price increases and productivity savings more than offset the absolute impact of cost inflation.
• Marketing investment grew 2% as we continue to invest and support growth across key categories.
Market highlights – US Spirits:
• Tequila net sales grew 15%, and drove significant share gains in both the spirits industry and tequila category. Casamigos net sales grew 14% driven by strong price/mix and volume growth, and the launch of Casamigos Cristalino. Don Julio net sales grew 13%, primarily driven by aged variants and the launch of ultra-premium Don Julio Rosado Reposado. Both Casamigos and Don Julio shipments grew ahead of depletions as supply availability enabled distributors to increase inventory to more optimal levels.
• Crown Royal whisky net sales declined 10%, lapping inventory replenishment in fiscal 22 when the brand recovered from supply constraints. Crown Royal gained double-digit share of the Canadian whisky category, and depletions grew ahead of shipments in fiscal 23.
• Vodka net sales declined 7%, primarily due to Cîroc, partially offset by growth in Smirnoff. Smirnoff growth of 4% was driven by core and flavoured variants. Ketel One net sales were flat, reflecting growth in the core variant offset by a decline in Ketel One Botanicals. Cîroc net sales declined 32% as consumers shifted into other spirits categories.
• Johnnie Walker net sales declined 13%. Johnnie Walker gained share of the scotch category driven by Johnnie Walker Black Label and Johnnie Walker Blue Label, and depletions grew ahead of shipments.
• Rum net sales declined 1%, primarily due to Captain Morgan, which declined 2%. Zacapa grew 13% driven by super-premium and luxury variants.
• Bulleit whiskey net sales declined 6%, lapping inventory replenishment in fiscal 22 when the brand recovered from supply constraints. Bulleit whiskey gained both spirits industry and US whiskey category share, and depletions grew double-digit.
• Buchanan’s net sales grew 10%, primarily driven by the launch of Buchanan’s Pineapple, an innovation that gained spirits industry share. Buchanan’s scotch declined 4%, but gained both spirits industry and scotch category share, and depletions grew ahead of shipments.
• Single Malts net sales grew 25%, primarily driven by ultra-premium Lagavulin 16YO and luxury innovation Lagavulin 11YO Charred Oak Cask.
• Spirit-based ready to drink (RTD) net sales declined 44% primarily due to lapping the launch of Crown Royal RTD in fiscal 22 and Loyal 9 underperformance in certain US states.
| North America contributed | North America organic net sales were flat in fiscal 23 | |
| 39% of Diageo reported net sales in fiscal 23 |
(1)Fair value remeasurements. For further details see page 22.
(2)For further details on exceptional operating items see pages 22 and 34-35.
(3)Reported volume movement has been impacted by acquisitions and/or disposals. For further details see pages 50-53.
(4)Certain spirits-based ready to drink products in certain states are distributed through DBC USA and those net sales are captured within DBC USA.
(5)Spirits brands excluding ready to drink and non-alcoholic variants.
(6)Organic equals reported volume movement.
(7)Casamigos trademark includes both tequila and mezcal.
(8)Bulleit whiskey excludes Bulleit Crafted Cocktails.
Europe
• Reported net sales grew 11%, driven by organic growth and the hyperinflation adjustment(1) related to Turkey, partially offset by an unfavourable impact from foreign exchange.
• Organic net sales grew 11%, driven by double-digit growth across most markets. Growth was mainly driven by price/mix, while holding volume.
• Price/mix was primarily driven by strong price increases across all markets, and supported by positive mix in beer and scotch.
• Spirits net sales grew 10%, driven by growth in scotch, vodka, tequila. Johnnie Walker grew 29% driven by Northern Europe, Southern Europe and Travel Retail.
• Beer net sales grew 18%, driven by price increases and volume growth. Guinness net sales grew 20% and gained share in the on-trade in Great Britain and Ireland.
• Organic operating margin declined by 13bps, primarily driven by cost inflation, partially offset by price increases, improved category mix and productivity savings.
• Marketing investment grew 7%, with focused investment in Tanqueray, Johnnie Walker, Baileys and Guinness.
Market highlights:
• Great Britain net sales grew 7%, mostly driven by strong performance in Guinness with strong market share gains. Spirits net sales growth was driven by tequila, vodka and RTDs, partially offset by gin.
• Northern Europe net sales grew 11%. Growth was primarily driven by scotch with strong double-digit growth in Johnnie Walker, and strong growth in vodka and tequila. Spirits gained market share.
• Southern Europe net sales grew 12%, led by strong performance in scotch, in addition to tequila and gin. Growth reflected continued recovery in the on-trade and increased tourism, alongside market share gains in spirits.
• Ireland net sales grew 16%, primarily driven by growth in Guinness reflecting share gains in a recovering on- trade.
• Eastern Europe net sales declined 3%, due to the suspension of exports to and sales in Russia as announced in March 2022 and the winding down of its operations announced in June 2022. In the rest of the market, spirits grew double-digit and gained market share primarily driven by Johnnie Walker.
• Turkey net sales grew 38%, with volume growth of 9%. Growth was driven by price increases in response to inflation and higher excise duties. Growth was broad-based, led by scotch, vodka and raki.
| Europe contributed | Europe organic net sales grew | |
| 21% of Diageo reported net sales in fiscal 23 | 11% in fiscal 23 |
(1)Reported volume movement has been impacted by acquisitions and/or disposals. For further details see pages 48, 50, and 53.
(2)Spirits brands excluding ready to drink and non-alcoholic variants.
(3)Organic equals reported volume movement, except for Tanqueray and JεB, which had reported volume movement of 1% and (6)% respectively.
Asia Pacific
• Reported net sales grew 11%, primarily reflecting strong organic growth and a favourable impact from foreign exchange.
• Organic net sales grew 13%. All markets grew, except Greater China, with strong double-digit growth in India, South East Asia, Travel Retail Asia and Middle East and North Asia.
• Price/mix of 7% was led by strong price increases across all markets. Positive mix was driven by strength in premium-plus scotch in most markets. Volume grew 8% in premium-plus price tiers.
• Spirits net sales grew 14%, primarily driven by double-digit growth in scotch, the region’s largest category. IMFL whisky(1) also contributed to growth, partially offset by a decline in Chinese white spirits.
• Organic operating margin expanded by 363bps as the benefits from the continued recovery of Travel Retail, price increases and operational efficiencies more than offset the impact of cost inflation.
• Marketing investment grew 9%, with focused investment in scotch in South East Asia, India, and Greater China.
Market highlights:
• India net sales grew 17%, driven by strong consumer demand and continued premiumisation. IMFL whisky and scotch delivered double-digit growth. Scotch growth was driven by Black Dog, Johnnie Walker Black Label and Black & White.
• Greater China net sales declined 4%. Strong performance in scotch was more than offset by a decline in Chinese white spirits which continued to be impacted by Covid-19 restrictions, especially in the on-trade. Scotch grew 13%, driven primarily by Taiwan, with strong performance in the super-premium-plus segment led by Johnnie Walker and The Singleton.
• Australia net sales grew 2%, primarily driven by price increases. Growth was led by rum, tequila and beer.
• South East Asia net sales grew 33%, benefitting from a strong recovery following the easing of Covid-19 restrictions and strong growth in the super-premium-plus segment. Scotch grew 31%, mostly driven by Johnnie Walker premium variants, and single malts, primarily The Singleton and Mortlach.
• North Asia (Korea and Japan) net sales grew 15%, benefitting from the recovery of the on-trade. Growth was primarily driven by double-digit growth in Windsor and Johnnie Walker premium-plus variants led by Johnnie Walker Blue Label and Johnnie Walker Black Label.
• Travel Retail Asia and Middle East net sales grew 67% primarily driven by Johnnie Walker premium-plus variants, led by Johnnie Walker Blue Label and Johnnie Walker Black Label.
| Asia Pacific contributed | Asia Pacific organic net sales grew | |
| 19% of Diageo reported net sales in fiscal 23 | 13% in fiscal 23 |
(1)Reported volume movement has been impacted by acquisitions and/or disposals. For further details see pages 50-53.
(2)Spirits brands excluding ready to drink and non-alcoholic variants.
(3)Organic equals reported volume movement.
(4)Growth figures represent total Chinese white spirits of which Shui Jing Fang is the principal brand.
Latin America and Caribbean
• Reported net sales grew 18%, reflecting organic growth and a favourable impact from foreign exchange, mainly due to a strengthening of the Mexican peso and Brazilian real.
• Organic net sales grew 9%, with most markets delivering growth, despite lapping strong double-digit growth in fiscal 22. Growth was broad-based across price tiers, except for value, which declined as a result of our premiumisation strategy. Strong price/mix was partially offset by a 3% decline in volume, primarily in the value price tier. Double-digit sales growth in the first half of fiscal 23 was followed by inventory normalisation in the second half.
• Price/mix was driven by strong price increases across all markets, and positive mix supported by the strength in premium-plus scotch in most markets.
• Spirits net sales grew 11%, primarily led by double-digit growth in scotch, particularly Johnnie Walker Black Label, Johnnie Walker Red Label and Old Parr. Growth was also driven by strong double-digit growth in Don Julio and Smirnoff.
• Organic operating margin expanded by 72bps. The positive impact of price increases, premiumisation, leverage on operating costs and one-off tax benefits more than offset the increases in marketing investment and cost inflation.
• Marketing investment grew 14%, ahead of organic net sales growth, with increased investment in most markets.
Market highlights:
• Brazil net sales grew 8%, led by double-digit growth in Johnnie Walker and Old Parr. Growth was driven by price increases and higher marketing investment, leading to market share growth.
• Mexico net sales grew 9%, primarily driven by scotch and tequila. Scotch growth was led by Johnnie Walker Red Label and Johnnie Walker Black Label, driven by price increases. Tequila growth was driven by price increases, the lapping of aged liquid supply constraints in fiscal 22 and increased marketing investment.
• Central America and Caribbean (CCA) net sales grew 14%, mainly driven by scotch and tequila. Growth was driven by price increases, premiumisation and continuing momentum in the on-trade. Scotch growth was mostly driven by Johnnie Walker Black Label and Buchanan’s, supported by increased marketing investment. Tequila growth was driven by Don Julio 1942.
• South LAC (Argentina, Bolivia, Chile, Ecuador, Paraguay, Peru and Uruguay) net sales grew 21%, primarily driven by scotch, vodka and gin. Growth was driven by price increases and premiumisation, partially offset by a decline in volume.
• Andean (Colombia and Venezuela) net sales declined 7%, due to an adverse macroeconomic environment in Colombia. Strong price increases and premiumisation were more than offset by a decline in volume.
| Latin America and Caribbean contributed | Latin America and Caribbean organic net sales grew | |
| 11% of Diageo reported net sales in fiscal 23 | 9% in fiscal 23 |
(1)Reported volume movement has been impacted by acquisitions and/or disposals. For further details see pages 50-53.
(2)From 1 July 2022 Uruguay and Paraguay domestic channels moved on a management basis from PUB (Paraguay, Uruguay and Brazil) to PEBAC (Peru, Ecuador, Bolivia, Argentina and Chile) and the new cluster has been called South LAC. This reflects how management reviews performance.
(3)Spirits brands excluding ready to drink and non-alcoholic variants.
(4)Organic equals reported volume movement.
Africa
• Reported net sales grew 1%, primarily driven by organic growth and disposals, mostly offset by an unfavourable impact from foreign exchange.
• Organic net sales grew 5%, with growth across all markets, except East Africa. Growth was driven by price increases, partially offset by a decline in volume.
• Price/mix of 12% was driven by price increases across all markets and positive mix. Volume declines were primarily in the value and standard price tiers.
• Spirits net sales grew 8%, driven by growth in international spirits particularly Johnnie Walker Black Label, and Orijin.
• Beer net sales grew 3%, with strong growth in Africa Regional Markets and Nigeria, partially offset by a decline in East Africa. Growth was primarily driven by Malta Guinness and Guinness, which grew 22% and 7% respectively.
• Organic operating margin expanded by 126bps, primarily driven by price increases, productivity savings, positive category mix and lapping prior year one-off costs. These impacts were partially offset by cost inflation.
• Marketing investment grew 2%, focused on supporting spirits premiumisation and Guinness.
Market highlights:
• East Africa net sales declined 2%. Growth in spirits was more than offset by a volume decline in beer following price and duty increases. Spirits growth was primarily driven by scotch, particularly Johnnie Walker.
• Africa Regional Markets net sales grew 22% led by growth in beer, primarily driven by Malta Guinness supported by price increases. Spirits growth was primarily driven by Johnnie Walker Black Label.
• Nigeria net sales grew 11%. Growth was led by Guinness and Orijin.
• South Africa net sales grew 1%, primarily driven by growth in tequila and rum, which offset declines in vodka and gin. Super-premium-plus brands grew strongly at 38%.
| Africa contributed | Africa organic net sales grew | |
| 10% of Diageo reported net sales in fiscal 23 | 5% in fiscal 23 |
(1)Reported volume movement has been impacted by acquisitions and/or disposals. For further details see pages 50-53.
(2)Spirits brands excluding ready to drink and non-alcoholic variants.
(3)Organic equals reported volume movement, except for Guinness and Malta Guinness, which had reported volume movement of (9)% and (9)% respectively.
Category and brand review
• Spirits net sales grew 6%, with flat volume. Growth was across most categories, including double-digit performance in scotch, tequila and IMFL whisky.
• Scotch net sales grew 12%, with 2% volume growth. Growth was led by Johnnie Walker, with strong growth of 15%, and scotch malts also grew strongly at 16%.
◦ Johnnie Walker Black Label grew 16%, with particularly strong growth in Asia Pacific, where it grew 30%.
◦ Johnnie Walker Blue Label grew 3%, supported by the return of Travel Retail.
◦ Johnnie Walker Red Label grew 16%, with double-digit growth in all regions except Africa.
◦ Scotch malts grew 16%, primarily driven by strong double-digit growth in Asia Pacific and North America.
• Tequila net sales grew 19%, reflecting strong performance of Don Julio and Casamigos which grew 20% and 16% respectively, driven by North America.
• Vodka net sales grew 1% with a volume decline of 3%. Declines in North America and Africa were offset by double-digit growth across all other regions.
• Rum net sales grew 2% driven by Captain Morgan growth across all regions except North America. Rum volume declined 7%.
• Liqueurs net sales declined 1%, driven by Godiva.
• Beer net sales grew 9%, with growth in all regions driven by strong performance from Guinness in Great Britain, Ireland, North America and Africa.
• Ready to drink net sales were flat, with growth in Europe and Africa offset by a decline in North America.
