Thanks to strong performance in the first half, North American sales rose 2%, with strong growth in U.S. Spirits, Diageo Beer Co. USA and Canada, although volume slipped 2%, as a result of Covid-19.
Tequila net sales in North America grew 36% reflecting strong double-digit growth in Don Julio and Casamigos throughout the year. Crown Royal net sales increased 8% driven by the sustained performance of innovations. Scotch net sales declined 9%.
Good growth in Malts was offset by lower sales of Johnnie Walker, as a result of the on-trade channel closure in the second half and lapping the prior year success of “White Walker by Johnnie Walker.”
Vodka net sales declined 7% due to lower sales of Smirnoff, Ketel One and Cîroc. Bulleit net sales increased 4%. Captain Morgan net sales decreased 5%.
Diageo Beer Co. USA grew net sales 8% as a result of the continued strong performance of ready-to-drink products. Beer net sales declined 5% due to the closure of the on-trade channel as a result of Covid-19.
Net sales in Canada increased 7% with broad-based growth across all categories, with the exception of beer, which was more impacted by the on-trade channel closure.
North America operating margin increased 75bps. The adverse margin impact from lower fixed cost absorption and a change in category and channel mix resulting from Covid-19 was more than offset by reduced discretionary expenditure, the company said.
CEO Ivan Menezes fiscal 2020 “a year of two halves: After good, consistent performance in the first half of fiscal 20, the outbreak of Covid-19 presented significant challenges for our business, impacting the full year performance. Through these challenging times we have acted quickly to protect our people and our business, and to support our customers, partners and communities.
The actions we have taken to strengthen Diageo over the last six years provide a solid foundation to respond to the impacts of the pandemic. We are now a more agile, efficient and effective business,” he said.
Through the second half of fiscal 20, Diageo clamped down on costs, reducing discretionary expenditure and reallocating resources across the group, he said, adding:
“We are further enhancing our data analytics and technology tools to rapidly respond to local consumer and customer shifts triggered by the pandemic. We have strengthened liquidity, giving us flexibility to continue to invest effectively in the business for the long term.
“While the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 21, I am confident in our strategy, the resilience of our business and am very proud of the way our people have responded. We are well-positioned to emerge stronger.”