Diageo global Scotch sales drop amid US whisky tarrifs
Johnnie Walker owner Diageo has reported a decline in sales of Scotch Whisky.
The company’s interim results revealed that global performance in Scotch softened to flat.
Diageo’s Single Malts portfolio Buchanan’s and Johnnie Walker reserve grew in the period but was offset by Johnnie Walker Black Label and Johnnie Walker Red Label which softened globally.
The company said that this was driven by challenging trading conditions in Mexico; volatility in travel retail and the Middle East; and political and economic disruptions in Peru and Chile. Innovation related to the
Diageo’s HBO Game of Thrones partnership maintained its value contribution compared to the prior period due to “Johnnie Walker Game of Thrones Limited Editions A Song of Ice and A Song of Fire” and the “Game of Thrones Single Malt Scotch Whisky Collection”.
The update revealed that Buchanan’s grew 9% in both North America and Latin America and the Caribbean. Scotch malts were up 17% with broad-based double-digit growth across all regions driven by core variants, Game of Thrones Six Kingdoms, Prestige Scotch in China and Singleton innovation in Taiwan.
Old Parr remained in growth driven by focused activations in Colombia, whilst JƐB slowed its declines in Iberia. Primary scotch brands remained flat largely as growth of Black & White and VAT 69, was offset by declines of Haig in Greece and Bell’s in Great Britain. Scotch continued to decline in Korea, driven by Windsor.
Diageo, which has a large portfolio including Gordon’s gin, Captain Morgan rum and Guinness, said that it expected full-year sales to be at the lower end of forecasts due to the volatility of global markets.
Nevertheless, the company labelled the company’s half-year trading performance as good, as its net sales rose by 4.2% to £7.2 million. Diageo’s operating profit also increased slightly by 0.5% to £2.4 billion.
Diageo denied that the US government 25% tariffs on single malt whisky had had an impact on its trading performance.
Ivan Menezes, Diageo chief executive, said: “Diageo has delivered another good, consistent set of results in the first half, with broad-based organic net sales growth across regions and categories. We have continued to increase investment behind marketing and growth initiatives, while expanding organic operating margins.
“There is ongoing uncertainty in the global trade environment and we would not be immune from further policy changes. We remain focused on building the long-term health of our brands, supported by data led insights and a culture of everyday efficiency.”