"While Diageo has been successful in developing its core brands in mature markets in which it is underdeveloped, such as Germany, with Smirnoff and Captain Morgan, it should also look to develop niche high-growth and high-margin areas, such as it is already doing in bourbon/other U.S. whiskey, and in areas such as super premium gin, with boutique brands".
Overall, net sales were up nearly 15% compared to the same period in 2015 at £6.4bn, while operating profit came in at £2.1bn - 28% ahead of 2015's numbers. The results show an increase in net sales (£6,421 million) and operating profit (£2,065 million) of 14.5% and 28.0% respectively, reflecting accelerated organic growth and favourable exchange.
In the United Kingdom the supplier - whose portfolio includes Smirnoff, Guinness, Baileys and Gordon's - increased its share in the off-trade.
Diageo plc (DEO) posted better-than-expected sale growth in the second half of a year ago Thursday driven by improved performance in the USA spirits business and its scotch portfolio. Baileys delivered over 100,000 samples in the period from London Cocktail Week to Christmas and over 2,000 Baileys' hot chocolates were sold in the first week of Edinburgh's Christmas market. Good sales of white spirits and scotch in Asia Pacific offset the continued contraction of the local whiskey market in Korea.
"The brand continued its partnership with Leicester City's captain, Wes Morgan, and launched its first dedicated out of home responsible drinking programme message/programme reminding consumers that "Only Anchors Go Overboard" during the festive season". Another brand, Bulleit, is growing at four times the category.
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"Guinness successfully lapped last year's Rugby World Cup, gaining share".
US Spirits is the biggest and most profitable market for the company, and the changes implemented by Diageo in the region, including a new leadership team, a new marketing strategy, and a new approach to launching innovations, has paid off.
"The previous year has seen a lot of change in our North American marketing approach and team to focus on the recruitment of millennial and multicultural consumers".
The unexpected increase in sales is a boost to investors.