Britons in the Diageo spirit

Drinks giant Diageo yesterday said it was hopeful that profits growth will be stronger over the next year as it benefits from a rebound in trading.

The Guinness-to-Johnnie Walker group has been encouraged by sales trends in the six months to June 30, when growth in developing markets helped to offset continued trading pressure in North America and most of Europe.

Operating profits rose by 2 per cent to 2.75bn in the year to June 30 and this rate should strengthen in the new financial period, the company added.

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While Europe has remained a challenging region for Diageo, it said British drinkers proved the exception as volumes rose 9 per cent and net sales lifted 5 per cent amid strong growth in sales of spirits and wine.

It said Guinness outperformed the beer category in Britain with broadly flat sales following the success of its Bring it to Life and 250th anniversary marketing campaigns.

Diageo said price pressure in Britain was driven by the faster growth of sales in the grocery sector, with "its competitive promotional environment".

The company is also behind brands including Smirnoff vodka, and Captain Morgan rum.

The group was created through the merger of Grand Metropolitan and Guinness in 1997 and has more than 20,000 staff and offices in 80 countries.

Johnnie Walker was the company's strongest performing brand in the year, with its Black Label version seeing double-digit sales growth due to strong demand in developing markets.

Smirnoff sales were slightly lower amid "intense" competition in the vodka market and a 7 per cent drop in sales in North America. Guinness volumes were 3 per cent lower as strong double-digit growth in South-East Asia offset a 2 per cent decline in Europe and flat sales in Africa.