Pulling its weight: black stuff bucks industry trend
GUINNESS HELD its own in a falling Irish market in the year to the end of June, with sales of the black stuff remaining steady. The performance came as the overall alcohol market declined by 4 per cent and beer sales dropped by 4.7 per cent, according to figures released by Guinness parent Diageo yesterday.
Within this smaller pool, Guinness increased its share of pub beer sales by 1.3 percentage points, accounting for 32.2 per cent, or one in every three pints pulled in the Republic.
Sales in pubs in the North grew by the same margin, while off-licence sales across Ireland were flat. Guinness, which this year celebrates the 250th anniversary of St James’s Gate, sells 95 per cent of its products in pubs.
Across its range of products, which include Smirnoff vodka and Bushmills whiskey, Diageo said it performed ahead of the total Irish market, which weakened by 4 per cent in volume terms and by 3 per cent in value over the first half, according to industry data from Nielsen.
Diageo quoted figures from the Revenue Commissioners showing a 9.3 per cent volume decline in alcohol sales up to the second quarter of 2009, suggesting the next set of Nielsen data could paint an even worse picture of the Irish market.
Diageo products account for 42 per cent of the domestic market and, like most other consumer-related businesses, it has struggled against recession and a nosedive in consumer confidence.
Profits across the global group have, however, met forecasts, with a 10 per cent rise in what chief executive Paul Walsh described as “a challenging year”. Diageo reported operating profits of £2.4 billion (€2.7 billion) on sales of £9.3 billion, which were flat on the previous year on an organic basis.
Globally, Guinness saw organic growth of 4 per cent, with African sales growth particularly strong at 18 per cent. In Southeast Asia, the brand’s largest market, sales were up by 11 per cent.
Across other brands, Diageo saw weakness in liqueurs, including Baileys, where sales dropped by 9 per cent. A spokeswoman suggested the brand’s premium status may have made it less attractive during a recession, while a reduction in travel had led to lower duty-free sales.
Bushmills was a flat performer in general, but its association with rugby helped it to grow slightly in the Republic. Across the group, Diageo’s best performances came in vodka, rum, tequila and beer. Less strong were gin and wine.
Mr Walsh said the results had demonstrated Diageo’s “resilience”. He said 2010 should see the company draw benefits from a £120 million (€136 million) restructuring, and forecast “low single-digit organic operating profit growth” next year.
Diageo is in the midst of reviewing its Irish operations and is expected to complete consultations by November.
