Diageo Australia has reported a net sales increase of 23% in FY21, driven by a strong performance in RTDs. RTD net sales grew 27%, led by Smirnoff Spiked Seltzers and Gordon’s Pink Gin innovations and Bundaberg Rum variants.

RTDs now account for 4% of the drinks giant’s net sales globally and grew 30% in the last 12 months.

The result for Diageo Australia builds on mid-single digit growth in FY20, benefiting from a strong spirits category, including spirits taking share of total beverage alcohol and off-trade momentum. Growth was described as “broad based across categories”.

In Asia Pacific, organic net sales grew 14%, following a 16% decline in FY20, driven by strong recovery in Greater China and Australia. Greater China grew 38%, supported by strong growth in Chinese white spirits and scotch.

Diageo’s reported net sales (£12.7 billion) increased 8.3% in FY21, while organic net sales were up 16%, driven by growth across all regions.

Super premium brands drive growth for Diageo in FY21

Diageo revealed its super premium brands grew 35% over the last 12 months, contributing to almost half its net sales growth in FY21.

Super premium growth was driven by strong commercial execution in US spirits on Johnnie Walker super deluxe variants, Cîroc vodka and its tequila brands, as well as growth of the Chinese white spirits category.

Diageo said the premium segment was on track to return to pre COVID‐19 levels. Growth was fuelled by Canadian whisky, the RTD portfolio in North America, the gradual recovery of beer in Africa and the scotch portfolio in Latin America and Caribbean and North America.

The standard segment has recovered to pre Covid‐19 levels, driven by growth in primary scotch brands, as consumers in some regions have sought more affordable alternatives. White Horse, Black & White and Bell’s grew strong double digits. Diageo also celebrated the bounce back in liqueurs, led by Baileys growing 24%, especially in North America and Europe.

Scotch grew 15%, with Johnnie Walker, Buchanan’s, scotch malts and primary scotch posting a strong recovery with net sales growing double digits. Scotch also benefitted from strong premiumisation trends in US spirits and some markets in Latin America and Caribbean and Asia Pacific.

Vodka grew in all regions except Asia Pacific. Smirnoff net sales grew 5% driven by flavours. Ketel One was flat and Cîroc grew 26% driven mainly by the US business where Diageo refreshed activations to engage with Cîroc’s consumer base.

Gin grew 14%, with double‐digit growth in Europe, Africa and Latin America and Caribbean. Tanqueray and Gordon’s both grew double digits.

Tequila grew 79% on top of a 25% growth in FY20. It now constitutes 8% of Diageo’s net sales. Growth was mainly driven by the strong performance of Don Julio and Casamigos in North America. Both brands gained significant market share in the US spirits category.

Beer grew 4% and Guinness was broadly flat. Decline in Europe and Turkey due to the impact of COVID‐19 on the on‐trade, particularly in Ireland and Great Britain were offset by strong growth of beer in Africa. Beer in Africa grew 19% driven by Guinness and Malta Guinness. Smirnoff flavoured malt beverages grew 17% in Diageo Beer Company USA.

Chief Executive Ivan Menezes (above) said: “These results demonstrate the strength and relevance of our brands and the extraordinary efforts of our talented people. I would like to thank all of my colleagues for their dedication and resilience, and to express my deepest condolences to all who have lost loved ones this year due to the pandemic.

“I believe that our foundation, built through outstanding brand-building, active portfolio management, consumer-led innovation, smart investment in data analytics tools and embedding a culture of everyday efficiency, has been a key competitive advantage for Diageo. We were well-positioned to successfully manage the challenges created by COVID-19, we have responded quickly to changing consumer trends and we have emerged stronger.”

Diageo Australia raises the bar

‘Raising the Bar’, Diageo’s $100 million global program to support pubs and bars around the world, has assisted more than 39,000 venues across 11 countries including Australia.

“A key priority has been supporting the hospitality sector through the pandemic, including our $100 million global fund to enable the safe re-opening and recovery of pubs and bars,” Menzes said.

Bundaberg Rum announced earlier this month that it was offering COVID-19 support to a further 300 pubs, clubs and bars across the country that are feeling the impact of the current public health restrictions and lockdowns.

Angus McPherson, Managing Director of Diageo Australia, said: “Raising the Bar is an $11.5 million initiative designed to support the hospitality industry through an enormously challenging period.

“Our hearts go out to hard working hospitality business owners and workers who had hoped for a busy winter holiday period, but have instead found themselves again having to shut their doors.”

The outlook for 2022

Menzes said that while the Diageo business had recovered strongly in fiscal 21, with net sales growth on a constant basis ahead of FY19 in three of its five regions, he expected near-term volatility in some markets.

“However, I remain optimistic about the growth prospects for our industry, with spirits continuing to gain share of total beverage alcohol globally and premiumisation trends remaining strong,” he concluded. “I believe Diageo is very well positioned to capture these exciting opportunities to drive long-term sustainable growth and shareholder value.”

Diageo Australia and Bundaberg Rum offers COVID-19 support to venues