Diageo Posts Organic Sales Growth Reaches 9.4%

Diageo Posts Organic Sales Growth Reaches 9.4%

Diageo reported an 18.4% increase in half-year net sales to £9.4 billion, but said demand for its drinks is slowing in some key markets, including North America.

Net sales increased 9.4% on an organic basis in the first half of fiscal year 2023, reflecting price increases, premiumization, and 1.8% organic volume growth. According to Reuters, the increase exceeded analysts’ expectations of a 7.9% increase.

While Diageo saw growth in all regions, its North America business, which accounts for nearly 30% of total sales, fell short of analysts’ expectations, according to Reuters. Organic growth of 3% was significantly lower than the predicted 6% increase. Meanwhile, volume fell 4% on an organic basis as Diageo absorbed strong demand in the prior year.

Diageo’s operating profit increased 15.2% to £3.2 billion in the six months ending December 31, 2022.

The ‘premium-plus’ brands accounted for 65% of the company’s organic net sales growth.

“Organic net sales grew 9%, with growth across all regions, organic volume grew 2%, and organic operating profit grew 10%,” said Diageo CEO Ivan Menezes. In a cost-constrained environment, our organic operating margin increased by 9 basis points while we continued to invest for the future.”

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“Sales growth was supported by our continued focus on premiumising our portfolio, which was bolstered by strong global premiumisation trends, with our super-premium-plus brands growing organic net sales 12%,” he added.