Drinks giant Diageo has delivered a positive message for whisky-makers, saying it expected sales of Scotland’s national tipple to keep rising “long term”.
The firm behind the world’s best-selling Scotch — Johnnie Walker — said organic net sales of whisky grew by 2% during the year to June 30, driven by strong growth in the Americas and Asia Pacific region.
Its “primary” Scotch brands did particularly well in Latin America and the Caribbean. Net sales of Johnnie Walker were up 5% globally, largely due to increased demand for its more expensive Black Label and Blue Label variants.
Diageo Europe, Russia, Turkey and India president John Kennedy said the outlook for whisky was looking good — justifying the group’s £1 billion-plus investment in the key Scottish industry over the past six or seven years.
“We expect mid-single digit percentage growth (annually) for whisky long term,” he added.
Mr Kennedy said London-based Diageo was also keeping a watching brief on trade war rhetoric in the US, which is the top market for whisky exports.
He said: “We are tracking it very closely. Our view is that no tariffs or reduced tariffs are the best way to grow”.
Net sales of whisky in North America were up 4%, helping to keep the global trend positive despite declines in Europe, Turkey and Africa.
Diageo’s other whisky brands include Bell’s, J&B, Haig Club and Vat 69.
Its single malt range includes Caol Ila, Cardhu, Dalwhinnie, Knockando, Lagavulin, Oban, Royal Lochnagar, The Singleton and Talisker.
Whisky accounts for a quarter of Diageo’s total net sales but the group also produces Guinness stout, Smirnoff vodka, Baileys liqueur, Captain Morgan rum and Tanqueray gin.
The firm said the single malts underperformed in 2017-18 despite strong growth in the UK and China.
The whisky performance, a 40% jump in demand for demand for tequila and a 16% rise in net sales of gin to meet a seemingly unquenchable thirst for the juniper-flavoured spirit contributed to a 5% increase in Diageo’s total organic net sales.
Reported net sales of £12.2bn and operating profits of £3.7bn were up by 0.9% and 3.7% respectively as organic growth was partially offset by adverse currency exchange rates, while pre-tax profits rose to £3.74bn from about £3.6bn a year earlier.
Chief executive Ivan Menezes said Diageo, which returned £1.5bn to investors last year and will deliver a further £2b through a share buyback programme in 2018-19, had achieved “another year of strong, consistent performance”.