Emerging markets are in the right spirits for Diageo

THE growing thirst of emerging markets for whiskey, gin and vodka cheered Guinness and Baileys firm Diageo yesterday as its western markets continued to suffer a debt hangover.

The group reported an 11 per cent profits rise in the year to June 30, with spirits fuelling more than 80 per cent of its growth as Johnnie Walker whiskey enjoyed an “exceptional” 15 per cent sales surge, driven by strong demand in countries such as South Africa, Brazil and Asia Pacific.

And Smirnoff enjoyed double-digit growth in Africa and Latin America, helped by a marketing campaign featuring Madonna.

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But its performance in western markets was more difficult, with UK net sales down two per cent despite strong performances for Smirnoff Red, Guinness and Red Stripe.

Western Europe as a whole saw net sales fall 4 per cent as the debt crisis squeezed people’s spending power, particularly in Spain, Portugal, Greece and Italy. But with sales in emerging markets up 15 per cent and now accounting for nearly 40 per cent of its sales, Diageo reported an 11 per cent rise in profits to £3.2bn, while bottom-line profits were up nearly a third.