Soaring demand in Brazil and a slump in China highlighted contrasting fortunes for Scotland’s national drink in results from whisky-maker Diageo yesterday.
The company, whose whisky brands include global market leader Johnnie Walker, Bell’s, Buchanan’s and J&B – posted weaker-than-expected earnings and sales.
Net sales for the group, which also makes Guinness stout, Baileys liqueur, Captain Morgan rum, Smirnoff vodka and Tanqueray gin, fell by 9% to £10.3billion during the year to June 30.
Analysts had forecast a figure of about £10.3billion.
Diageo’s 2013/14 pre-tax profits came in more than 11% lower than a year earlier at £2.71billion.
Brazil was one of the success stories for its whiskies, with increased demand for Johnnie Walker and Diageo’s Old Parr, White Horse and Black and White brands driving a 13% rise in net sales.
But whisky sales to China were down by 20% as exports continued to be affected by government anti-extravagance measures, which have hit the practice of corporate gift-giving.
Sales of Johnnie Walker Black Label to China slid by 28%, although the brand variant grew market share.
In the US, sales of Johnnie Walker super and ultra premium whiskies grew by 50% following the launch of “platinum” and “gold reserve” variants.
Diageo said its single malts performed “very strongly”, with global net sales up 18%.
The increase was driven by the recently launched Talisker Storm and widespread interest in the Talisker Whisky Atlantic Challenge rowing event, it added.
The company also reported strong growth for The Singleton and Lagavulin, up 17% and 23% respectively.
Diageo chief executive Ivan Menezes said: “Our business has faced macroeconomic and market specific challenges that have impacted our top-line performance.
“But we have gained share and expanded margin, while continuing to invest in our brands, our markets and our people to create a stronger business that will deliver on the long-term growth opportunities of this attractive industry.”
He added: “Our regional performance has been mixed.
“In North America, we have again delivered top-line growth and significant margin expansion, and our western European business is now stable.
“Emerging market weakness, often currency related, but also including some specific issues – such as the anti extravagance measures in China – has led to weaker (overall) top-line growth.”
Mr Menezes, who took the helm last year, said a “ruthless” focus on driving out cost had driven margin improvement, adding: “We have reshaped the organisation and enhanced skills and capability across the whole team at Diageo.
“We start fiscal ’15 as a more agile organisation, building on the changes in behaviours that have been made across the business this year.”