Diageo sobered by drop in US wine sales
AMERICAN drinkers cutting back on spirits and wine during the recession and emptier duty-free stores at airports have led to sales slumping at drinks giant Diageo.
Underlying sales for the Guinness, Smirnoff and Johnnie Walker owner fell 7 per cent in the first three months of 2009, the company said.
Sales for the nine months to March 31, 2009, were flat. Chief executive Paul Walsh said the drop was driven by one million fewer cases of wine and spirits being stocked by its US distributors than at the end of 2008.
“We identified stock risks because of the difficult consumer market there,” he said.
Fewer airline travellers hit duty-free sales and its Russian market had seen “significant decline” since January. Walsh said: “Russian consumers are being less extravagant in their spending and buying more premium and standard brands than super-deluxe brands.”
Despite global trade “weakening” in the second half, Diageo expects profit growth of between 4 and 6 per cent for the year ended June 30.
It did not comment on suggestions that it may bid for the wines and spirits business of French luxury goods group LVMH or Southern Comfort owner Brown-Forman.