Guinness scores record pub market share

Diageo boss Paul Walsh said he believed the economic environment is in the "early stages" of recovery, as the drinks giant announced Guinness had scored its highest ever market share of beer in UK pubs, 7.6 per cent.

Commenting on Diageo's results for the six months to December 31, 2009, Walsh said the period had been "challenging", but that improvements in the group's cost base and "efficiency of its functions" had strengthened it financially.

In the UK, Diageo's overall volumes rose six per cent, with net sales up five per cent.

Diageo said this was the result of a successful Christmas campaign on spirits and strong performances from Guinness and wine, particularly Blossom Hill.

Marketing spend was focused behind key programmes and brands, in particular the 'BE THERE' campaign on Smirnoff and the '250th Celebration' campaign on Guinness.

Thanks to a series of promotions the Black Stuff achieved its strongest ever beer market share in the on-trade at 7.6 per cent during the period.

Net on-trade sales of Guinness were up three per cent.

Diageo said the off-trade had showed some growth, thanks to the smaller pre-mix and ready to serve cocktail segments, such as Smirnoff and Schweppes Tonic and Morgan's Spiced and Cola.

Marketing spend across Europe was down 14 per cent, which Diageo said was the result of reduced consumer spending in Spain and Portugal, Ireland and Eastern Europe.

Walsh said the group was sticking to its earlier guidance that organic operating profits for the full year would grow by a low single digit figure.

"At a time when future economic and consumer trends continue to be difficult to forecast, the steps we have taken have created a stronger business which will position the company well," he added.

Diageo results at a glance

Turnover (net of duty): £5,207m (up three per cent)

Operating profit (pre-exceptionals): £1,631m (down one per cent)

Basic earnings per share: 40.9p (down 10 per cent)