IT’S not so much that the world is turning to drink in these austere times. Rather, the latest trading updates from two highly-resilient drinks giants, Diageo and SABMiller, suggest that – when times are tough economically – it is more a case of consumers not wanting to also relinquish small luxuries.
Of course, it doesn’t hurt that Diageo, in spirits, and SABMiller, in beer, have the sheer geographic diversity and product depth to weather country-specific challenges and still have the trading numbers come up smelling of relative roses.
So, Diageo, Scotland’s biggest whisky company, had problems in its third trading quarter, with volumes down 1 per cent and organic sales growth of 4 per cent, under-shooting market expectations of 5 per cent.
These challenges ranged from harder comparatives, duty increases, shipment phasing, the decline of Scotch consumption in South Korea, and consumer headwinds in Brazil and Nigeria. Western Europe’s continued economic woes also continued to take their toll on Diageo’s sales there.
But then the cavalry rides in. Sales in the first nine months of Diageo’s financial year rose a sturdy 6 per cent in North America.
This is highly significant given that the region is the most important one for the company, accounting for 30 per cent of global sales and 40 per cent of profits.
Sales in Latin America and the Caribbean were up 14 per cent, and Africa, Asian Pacific and Eastern Europe were also all still going in the right direction.
Meanwhile, SABMiller might have suffered from its upmarket on-trade bias in the Czech Republic and difficult trading in its home South African market.
But it contradicted many pessimistic expectations by seeing lager volumes jump 6 per cent over its latest trading year. and further buoyancy elsewhere in Africa, where volumes are also up 6 per cent.
The resilience given by geographic and product diversity is, not infrequently, a kneejerk management-speak platitude.
But in the case of the world’s big drinks players, as so clearly demonstrated by SAB and Diageo, it is no more than the simple truth.
When the macro-economic climate is tough, a broad spread of operations helps even out the local difficulties and prevent headwinds turning into crises.
Stagecoach’s night bus will also have a day job
STAGECOACH will be well pleased if the launch of its Megabusgold.com network of sleeper coach services between 11 Scottish locations and London is even a quarter as successful as its prototype Megabus.com service launched nine years ago. However, Stagecoach founder and chief executive Sir Brian Souter differentiates the proposed new service, which shares a similar name to its forerunner, as a “value” product rather than the strict “discount” offering associated with megabus.
Souter reckons the service will be able to offer strong competition to overnight train sleeper services as well as early-morning flights, and will appeal to a wide target range, from the self-employed to leisure customers who do not want to fork out for expensive London hotels.
The fact that the fleet of ten new sleeper coaches will also have a day job, operating on the existing Scottish Citylink Gold network between Glasgow, Aberdeen and Inverness, also reduces the financial risk.