Guinness volumes down 8% in Britain

Guinness volumes fell 8% in Great Britain during the six months to 31 December with net sales down 2% on last year, drinks giant Diageo has reported.

However Diageo said Guinness had achieved 24 consecutive months of market share growth in Britain and that last year was particularly strong due to the positive impact of the Rugby World Cup.

Its growth in market share has been driven by a shift in strategy to focus on less frequent purchasers and driving footfall in the on-trade through campaigns such as its 17:59 execution.

In Great Britain, overall net sales were down 1% driven by the decline in the beer and ready to drink markets but this was off-set by a strong performance by spirits, which benefited from price increases.

Smirnoff volumes were down 5% but net sales rose 2%, thanks to a price increase while Baileys also showed good volume and net sales growth.

In Europe, overall volumes were down 5%, net sales down 3% and operating profit down 4%. The overall performance in Europe was driven by the weaker Spanish market where net sales declined 18%. In Europe, net sales of spirits were down 2%, beer down 4%, ready to drinks down 12% and wine down 2%.

Overall, Diageo reported a 3.2% rise in six-month profits to £1.4bn but said that its full year profit forecasts growth had been cut from 7-9% to 4-6% due to the current economic conditions.

"Current economic trends indicate that consumer confidence will reduce further and the outlook for the second half is more difficult to predict," said Diageo chief executive Paul Walsh.

"However, across Diageo we have an experienced management team which combined with the consumer appeal of our brands, the effectiveness of our routes to market and our geographic diversity gives us confidence in our business.

"In the second half we will be yet more agile in our response to changing consumer demand and we will continue to invest behind our business while achieving efficiencies across the regions particularly in marketing spend where we are seeing strong media rate deflation.

"Given these strengths, albeit with more uncertainty about the wider economic environment, we believe we can deliver organic operating profit growth for the full year in the range of 4% to 6%.

"In the second half we will implement a restructuring programme designed to ensure that Diageo emerges from this challenging time with improved routes to market, even stronger brand positions and enhanced financial strength."