DIAGEO and SABMiller, two of the world’s biggest drinks companies, have underlined the strengths of their geographical reach with resilient trading updates in the face of localised headwinds.
Diageo, Scotland’s biggest whisky company, revealed yesterday that higher prices in the United States offset weakness in Brazil, Nigeria and South Korea in its third trading quarter.
SABMiller, the world’s second-biggest brewer, posted a 7 percent rise in full-year organic revenue, boosted by strong demand in Africa and a surprisingly-robust performance in economically-battered Europe.
Diageo said in the three months to 31 March that organic net sales grew 4 per cent, but volumes were down 4 per cent, compared with a 1 per cent rise in the previous three months.
Over the longer nine-month period, North America – its biggest market, accounting for 40 per cent of the group’s revenues – saw net sales rise by 6 per cent.
Sales in the same period in Latin America and the Caribbean rose by 14 per cent, were up by 9 per cent in Africa, eastern Europe and Turkey, and were 4 per cent ahead in Asia Pacific.
Western Europe remained tough for Diageo, however, particularly Spain, with sales falling by 4 per cent.
Chief executive Paul Walsh said: “Despite consumer weakness in three markets – Korea, Nigeria and Brazil – Diageo’s performance for the nine months is in line with the first half.
“Strong performance from our biggest business, US spirits, the continued growth of spirits in Africa, share gains across our markets in Asia Pacific, and double-digit growth of Johnnie Walker, Crown Royal and Buchanan’s [whiskies] and Tanqueray [gin] are the highlights of the quarter.”
Diageo said factors affecting its figures included consumer weakness in Brazil, duty rises in Turkey, the continued decline of the Scotch whisky market in Korea and elections in Kenya.
SABMiller – which has its head office in Surrey and owns more than 200 beer brands including Grolsch, Peroni and Miller Genuine Draft lagers – said full-year lager volumes rose organically 6 per cent in Africa despite tough comparatives, as additional capacity kicked in. The final quarter was up 9 per cent.
Europe proved to be more resilient than expected, with new “brand and pack innovations” helping lager volumes to grow organically 6 per cent despite severe economic headwinds in the year to 31 March.
However, lager volumes in Latin America, SABMiller’s largest market, fell 1 per cent in the final quarter, hit by softer economic conditions and some geographic price rises.
Warmer weather in China helped the company to post an improved performance in the fourth quarter after the country’s coldest winter in 28 years hit demand in the third quarter.
Shore Capital analyst Phil Carroll described the updates from both Diageo and SABMiller as “solid”.