Political Tensions Dampen Diageo's Spirits

04 September 2006

LONDON: Liquor giant Diageo has notched an 11% rise in annual pre-tax profits to £2.1 billion ($3.9bn; €3.1bn), but is reluctant to talk up expectations for fiscal 2007 thanks to geopolitical uncertainties such as the Middle East conflict and terrorism fears.

The company, whose brands include Smirnoff, Johnny Walker and Guinness, reported healthy sales in North America, where consumers have been drinking more spirits and less beer, and in international markets.

Europe was weaker, with sales volumes up only one per cent, because of a 20% decline in volumes of "ready to drink" beverages and a 3% decline in Guinness sales in Ireland.

Ceo Paul Walsh said the group hoped to improve Guinness revenues with higher prices and a low-alcohol version, but expected recovery to be slow: "You will see Ireland being somewhat of a drag for the foreseeable future."

Data sourced from Financial Times Online; additional content by WARC staff