Diageo signals turnaround after another flat year

In an attempt to counter the slide in sales the company has also been innovating with the development of a number of new flavoured products like Crown Royal Regal Apple whisky, along with Ciroc pineapple gin as well as Guinness golden ale and Guinness Blonde American lager.

Net sales in spirits – principally whiskey, vodka and rum, were down 2 percent though due, the company says, to the impact of last year’s increase in government excise duty. Ciroc vodka almost doubled in size, aided by the successful launches of Ciroc Amaretto and Ciroc Pineapple. Most of the spirits giant’s leading brands suffered net sales declines, including Smirnoff (-3%), Captain Morgan (-12%), Johnnie Walker (-15%), Baileys (-5%) and Ketel One (-2%).

Worldwide, Diageo continues to face significant headwinds.

Diageo’s volume fell by 3% on an organic basis in North America for the 12 months ending June 30, while its net sales dropped by 1%.

Net sales in the year to June 30 were up slightly at £10.8 billion but pre-tax profit was up to £2.9bn.

The firm, which controls two-fifths of the Scotch whisky industry, reported Scotch sales down 5% by volume. Shipping volumes are also down 1%.

He said “we are active managers of our portfolio” and hinted the wine business – it owns Piat d’Or and Blossom Hill – could be next.

Jeremy Cunnington, a senior alcoholic drinks analyst with Euromonitor global, said: “While there have undoubtedly been errors in judgment such as slowness in developing a high end bourbon, spirits is a long game and judgment should not be rushed”. Diageo has said it is working with the SEC on the matter.

Diageo made the claim at its full-year results, with bosses saying next year will bring a return to organic growth, with big pushes in South Africa, India and the US.

Earlier this year Diageo was at the centre of speculation about a bid from 3G Capital owned by Brazil’s richest man, Jorge Lemann.