HARD-HIT GREEK and Spanish consumers appear to have refrained from drowning their sorrows in international alcohol following rises in duty.
Diageo, the UK-listed drinks group, said net sales in the biggest casualties of the eurozone slowdown dropped “markedly” in the quarter to end-September compared with the same period last year. North America, the biggest market, and Asia put in stronger performances, helping overall net sales to rise by 5 per cent on an organic year-on-year basis to £2.06 billion (€2.34 billion).
Chief executive Paul Walsh said yesterday the group faced tough trading in Greece, and Spanish net sales were down year-on-year, reflecting the debt crisis crippling these southern EU economies.
“The consumer environment in Europe is slightly weaker than we expected in the prior year,” Mr Walsh said in a trading update for its July-September first quarter and ahead of its annual general meeting yesterday.
The European region produces nearly a third of the group’s profit. Spain is one of Diageo’s three key markets in Europe, with Britain and Ireland, which together make up over half of the group’s European sales. The update gave no information on sales in Ireland.
The group reported a strong performance from operations in Latin America, Africa and Asia Pacific. North America posted stronger growth than in the previous year.
Rival Pernod Ricard reported similar sales growth to Diageo at 2 per cent in the year to June 2010, but double the operating profit growth at 4 per cent, as it saw signs of growth in markets such as Asia and Latin America.
The maker of Absolut vodka and Chivas Regal whisky will report its first-quarter (July-September) sales on October 21st, and give its annual profit target for its year to June 2011 at its agm on November 10th. – (Copyright The Financial Times Ltd 2010; Reuters)
