Diageo chief says EU is good for long-term trade deals
Ivan Menezes, group chief executive, said in the short term Britain voting against Brexit would make trading in Europe easier. But he said in the longer term the main gain was the effect of global free trade agreements.
“Scotch whisky relies on free trade agreements around the world. You are better off in [FTAs] if you have more clout, and the EU brings more clout to the table,” Menezes said.
However, whatever the result of the referendum on EU membership, he said the issue of corporate relocation did not arise. “The good thing about Scotch whisky is we are going to be in Scotland come what may,” Menezes said.
His comments came as Diageo reported a 1.8 per cent rise in interim organic sales growth, but adverse currency movements and asset sales, including the company’s wines, cut operating profit by £156 million to £1.72 billion.
Diageo, which lifted the interim dividend 5 per cent to 22.6p, said all six of its big global brands were in sales growth, including 1 per cent at Johnnie Walker Scotch whisky, 8 per cent at Tanqueray gin and a booming 9 per cent growth at Guinness, boosted by drinkers watching the Rugby World Cup. Organic net sales of Scotch malts rose 10 per cent.
Menezes said Diageo would continue to plough money behind its high-end whiskies, but there would also be an increasing push behind the more value-led brands, such as Black & White and White Horse, as some economies, such as Latin America and Africa, came under pressure.
“We are building a very substantial mainstream spirits business,” he said.