How Did The Key Categories Perform For Diageo In Its FY 2016?

Diageo (NYSE:DEO) is a global leader in alcoholic beverages, with a diverse collection of brands across spirits, beer, and wine. Their products are sold in more than 180 countries around the world. The key categories for Diageo, which includes spirits, beer, and ready to drink, together account for 90% of its net sales.

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For Diageo, spirits, which represents 66% of the net sales, witnessed a percentage fall in the reported sales, but was up 3% on an organic basis. Scotch contributes the highest to the company’s sales, at 24%, but was flat during the year. While sales grew in North America, Europe, and Latin America and Caribbean, driven by Johnnie Walker and Buchanan, the sales decline in Africa and Asia Pacific were a drag on results. Vodka, 13% of Diageo’s net sales, grew 1%, with the performance of Smirnoff, its largest brand in the category, improving 2%. Another brand, Ketel One, returned to growth in the United States and Canada, as a result of a new campaign and pricing strategy. North American whiskey was another strong performer in the category, with a 6% rise in sales, with growth and market share gains in its Crown Royal Regal Apple and Bulleit brands. IMFL (Indian Made Foreign Liquor) whiskey also improved 3% and tequila sales were up 8%. In the future, we expect the spirits segment to drive growth in the North American region, with strong growth expected in the North American whiskey.

Beer contributed 18% to Diageo’s net sales in FY 2016, and strong growth in Africa, of 11%, pushed the net sales up 6%. Primary drivers for this were East Africa and Nigeria, where excise duty remission resulted in strong growth for Senator in East Africa, and improved performance of Malta Guinness and Pilsner drove growth in Nigeria. Beer is expected to be the primary growth driver for the company in Africa, even in the future. The ready to drink category represents 6% of the company’s sales. However, it declined 11%, primarily as a result of a fall in Orijin in Nigeria. This was offset by a good performance of Smirnoff Ice flavors in the US.

Have more questions on Diageo? See the links below:

• What Resulted In A Turnaround In Diageo’s North American Business?
• How Did Diageo Perform In Its FY 2016 In Terms Of Key Financial Indicators?
• Diageo Returns To Growth, Outlook Looks Bright
• Will US Spirits Volume Growth Boost Diageo’s Year Ended June 2016 Results?
• Why Did Diageo Invest In A Non-Alcoholic Drinks Company?
• Can There Be A Silver Lining For Diageo In The Aftermath Of The Brexit?
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• What Has Been Driving The U.S. Spirits Market?
• What Is The Share Of Premium Spirits In The U.S.?
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• What Is Diageo’s Position in India’s Alcoholic Beverage Market?
• Why Are We Bullish On Diageo?
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• Was Don Julio Tequila A Shot Worth Taking For Diageo?
• What Is India’s Share In The Net Sales Of Diageo Before And After The Purchase Of United Spirits Limited?
• Diageo: Year 2015 In Review
• How Will Diageo’s Revenue And EBITDA Composition Change In The Next Three Years?
• Where Will Diageo’s Growth Come From In The Next Three Years?
• What is Diageo’s Fundamental Value Based On Expected 2016 Results?
• What Is The Share Of Global Net Sales For Diageo, By Alcohol Category, And How Has It Changed?
• How Has Diageo’s Revenue And EBITDA Composition Changed In The Last 3 Years?
• How Has Diageo’s Volume Share Of Premium Spirits Changed Over The Years?
• What Are Diageo’s Highest And Lowest Growth Markets?
• By What Percentage Did Diageo’s Revenue & EBITDA Decline In The Last 3 Years?
• What Is Diageo’s Revenue And EBITDA Breakdown?
• How Has Diageo’s Volume Composition Changed In The Last 3 Years?

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