Latin America drives Diageo to first quarter growth

Drinks giant Diageo has reported 3.1% organic sales growth for the three months ending September 2013.

Reported net sales for the quarter were flat, which the company said reflected “the termination of the distribution agreement for Jose Cuervo”.

The largest growth was seen in Latin America and Caribbean, which saw 10.9% organic sales growth. North America saw 5.1% growth while Africa, Eastern Europe and Turkey and Asia Pacific grew 1.3% and 0.6% respectively. The company’s recent problems in Western Europe continued as the market contracted by 1.1%.

Ivan Menezes, Diageo’s chief executive said: “Our performance in the quarter was good given weakness in some markets. The strength of our biggest business, US spirits, underpinned our performance. Our business in Western Europe performed in line with the slightly improving trends we saw in Q4 of F13, although I still expect a low single digit net sales decline for the full year.

“While there are headwinds in some emerging markets, including the impact of the government policies in China, there are also markets in which we continue to deliver robust growth and Diageo’s strength is the diversity of our geographic breadth and broad category reach. We continue to make this strong business stronger and we remain committed to delivery of our medium term guidance.”

Diageo’s growth in North America was driven by strong performances from Cîroc, Crown Royal and Ketel One vodka. The company added that despite improvements in Korea, an improved performance in Diageo India and continued strong growth of super and ultra-premium scotch brands in China the performance in Asia Pacific was “affected by currency related distributor destocking in the region” and government policies in China.