Diageo's Hurricane Hangover

17 November 2005

Poor performance in Europe and hurricanes in the US have dented sales at drinks giant Diageo.

The world's biggest spirits company, whose brands include Smirnoff vodka and Johnnie Walker Scotch, has warned it may miss its first-half profits and revenue forecasts - H1 ends December 31.

The company adds it is too early to tell whether full-year figures will be affected, but it is still expecting 4% sales growth and a 7% rise in operating profits.

Diageo, headquartered in London, says hurricane-related closures of bars and casinos hurt sales of its products in the US, which accounts for about 40% of overall profit. However, Ivan Menezes, president and ceo of North American operations says about the coming months: "We've found that when a hurricane hits, things slow down, but then a ton of money hits the affected area."

In Europe the Guinness beer brand has performed poorly, due in part to the smoking ban in Irish bars and pubs which has depressed drinker numbers. Premixed bottled drinks, such as Smirnoff Ice, have also suffered from higher taxes imposed to discourage underage drinking.

Data sourced from Wall Street Journal Online; additional content by WARC staff