Marking its first annual sales loss since 2020, Diageo reported a -1.4% fall in net sales for fiscal year 2024 during its earnings call Tuesday morning.
Here’s the overview:
- Facing an “extraordinary consumer environment,” sales dipped to $20.3 billion with volume down by -3.5% in the fiscal year ending June 30.
- The losses were primarily driven by a -21.1% plunge in the Latin American and Caribbean (LAC) region.
- Organic operating profit declined by $304 million or -4.8%, of which $302 million was attributable to LAC, with reported operating profit rising by +8.2% to $6 billion mostly due to cost savings.
- Over FY24, the group has increased its spend on marketing by 4%, with a focus on beer, Johnnie Walker and tequila.
Guinness was the primary driver of overall net beer sales growth of 18%, meanwhile overall spirits sales declined. Non-alcohol beer sales also reflected wider industry trends, with Guinness 0.0 net sales and volumes more than doubling in Europe.
Within the U.S.— the group’s biggest market— sales declined organically by -3%. Tequila, which has driven growth for the group, saw net sales decline -5%, largely due to a -22% decline in George Clooney’s Casamigos. Whiskey also struggled: Crown Royal net sales dipped -1% while Jonnie Walker fell -10% with mid-range Black label buoying the rest of the lineup. Vodka net sales declined -8%, with Cîroc net sales down -28%, partially offset by the launch of Cîroc Limonata, while the rest of the vodka portfolio, Smirnoff (-3%) and Ketel One (-5%) were down as well.
Bright spots include Don Julio (+12%) as depletions grew +21%, significantly ahead of shipments, primarily thanks to Don Julio Reposado. Bulleit whiskey net sales increased +12% and Buchanan’s net sales were up +3%, primarily driven by Buchanan’s Pineapple recruiting new consumers.
Sales of spirits-based cocktails were also positive (+15%), driven by the successful launches of the Cocktail Collection, which leverages the group’s major brand names into ready-to-drink cocktails, and Smirnoff Smash.
Internationally, the group blamed a highly competitive environment and downtrading in its major problem area and second largest market: Mexico. Net sales in the country declined -30%, with double-digit dips in scotch and in tequila, led by Don Julio and blamed on consumers switching to cheaper tequila and local spirits.
The group said it is expected to get back on track to its medium-term guidance range (organic net sales growth of 5% to 7%) once the consumer environment improves, but CEO Debra Crew said with factors like high inflation and consumer confidence impacting sales, it was “hard to call” when that would be.
This month Diageo has sold two brands, the latest offloaded Venezuelan rum label Pampero to Italian food and spirits company Gruppo Montenegro.