Diageo reports that the Irish beer market continues to decline across all channels.
In an Interim Statement the company explained that the fall in Guinness net sales “mainly due to the warm weather” had led to the brand losing a 0.5% percentage point share here.
Diageo also stated that the increase in excise duty last year contributed to a net sales decline of 16% in the company’s spirits portfolio here during this time.
Diageo’s sales across Western Europe declined organically by around 1%.
According to John Kennedy, President of Diageo Western Europe, “The net sales decline of 1% was largely driven by the tough economic environment in Southern Europe and Ireland, where the beer market continues to decline”.
Diageo plc’s global volume sales fell 3% organically in H1 compared to the same quarter the previous year, with reported net sales down 1% to £5.93 million (€7.18m) from £5.98 million (€7.24m) although the company reports an organic net sales rise of 2%. (The weak market in Nigeria has led to consumers trading down to value brands while the beer market remains ‘challenged’ in Ireland.)
Beer was the only category to decline, down 2.6%, with weakness in Nigeria and Ireland being cited as probable cause.
Globally, Guinness sales were down 1% in (organic) value and 5% in volume.
There were also exceptional operating charges of £17 million (€20.58m) for “the restructuring of the group’s supply operations in Ireland”, up £13 million (€15.74m) on the previous year’s H1 figure.
The company states, “In the six months ended 31st December 2012 exceptional operating items also included a gain of £20 million in respect of changes to future pension increases for the Diageo Guinness Ireland Group Pension Scheme”.
All this led to a global Operating Profit of £2.04 million (€24.26m), up 1% on the previous year’s H1 figure.