Gin and tequila sales have led strong results for Diageo in its latest half-year earnings.
Net sales growth for gin accelerated to 28%, with both Gordon’s and Tanqueray “up strong double digits”.
Meanwhile, tequila net sales increased 29%, with both Don Julio and Casamigos delivering strong growth and share gains in the US.
Scotch had a strong first half with 7% top line growth, with Johnnie Walker net sales up 10%.
Beer net sales were up 4%, largely driven by Guinness, with net sales up 4%
Overall, in the first half of fiscal 19, Diageo’s organic net sales were up 7.5% to 6.91 billion pounds. China was particularly strong, surging 20%, helped by strong demand for Scotch and Chinese white spirits and allaying concerns of any impact from a slowdown in the world’s second-largest economy.
India was also buoyant, with organic net sales rising 12%.
The results beat half-year earnings and sales forecasts and the company said it would buy back 660 million pounds of shares, sending its stock to a new high on Thursday.
The company said the latest share buyback would take the total repurchase program to up to 3 billion pounds for the year ending June 30.
Diageo also noted that it booked an exceptional pre-tax gain of 154 million pounds from its recent sale of 19 lower-end brands, including Seagrams VO Canadian whisky, for $550 million to Sazerac.
Ivan Menezes, Chief Executive, commenting on the results said: “These results are further evidence of the changes we have made in Diageo to put the consumer at the heart of our business, to embed productivity and to act with agility to enable us to win sustainably.
“This half has benefitted from some one-time and phasing gains in both organic net sales and operating profit, and therefore we continue to expect to deliver mid-single digit organic net sales growth for the year and to expand operating margins in line with our previous guidance of 175 bps for the three years ending 30 June 2019.”
