Diageo forecasts 5-7 per cent sales growth for fiscal 2023-25

Diageo on Tuesday said it expects to grow organic net sales in the double digits in the first half of the year, based on increased brand investments and a rapid consumer shift towards high-end brands.

Issuing guidance ahead of its capital markets day, the Johnnie Walker whisky and Tanqueray gin maker said it expects organic net sales growth of at least 16 per cent in the first half of its fiscal 2022 year ending June 30 and organic operating profit growth to be ahead of sales growth.

It also anticipates accelerating organic sales growth to between 5 per cent and 7 per cent in the fiscal 2023-2025 period, compared with the 4 per cent to 6 per cent growth during 2017-2019. It also sees growing earnings by up to 9 per cent by the end of its fiscal 2025.

“While we expect inflationary pressures to increase, we also expect to benefit from operating leverage, premiumisation, revenue growth management and productivity gains,” Chief Financial Officer Lavanya Chandrashekar said in a statement.

The pandemic has been a boon to Diageo as locked down consumers stocked up on alcohol and beers and traded up to more premium versions due to higher savings.

The company ended fiscal 2021 with one of the highest growth rates in its history, propelled by strong at-home demand in the United States and partly due to the re-opening of bars and restaurants in Europe where vaccination is more widespread.

The company also plans to achieve a 50 per cent increase in total beverage alcohol (TBA) market value share, from 4 per cent in 20201, to 6 per cent by 2030.

Ivan Menezes, chief executive, said: “We believe our sales growth trajectory has accelerated, underpinned by the strength of our advantaged position across geographies, categories and price tiers. TBA is a large, growing and attractive sector of which Diageo currently has a 4 per cent value share.

“With continued investment in marketing, digital capabilities and our people, we have significant headroom for growth. This gives us the confidence that we can grow Diageo’s value share of TBA from 4 per cent in 2020,1 to 6 per cent by 2030.”