Diageo sales up as Guinness grows

The ailing Guinness brand has returned to growth in the UK and Ireland, according to drinks giant Diageo, which has announced an increase of 5.3% in pre-tax profits to £1.37bn for the six months to December 31, 2007.

The group also reported that operating profits rose by 8% to £1.41bn and group sales rose 7% to £4.29bn, as increased advertising lifted sales of Smirnoff vodka and Johnnie Walker whiskey in the US and Asia.

In Europe, operating profits were up 2% from £484m to £509m in the period, with Guinness returning to growth in the UK and Ireland following increased marketing investment. There was strong growth throughout Eastern Europe as a result of strong performance of Johnnie Walker, J&B and Smirnoff.

The distiller is spending more on advertising such as the “Clearly Smirnoff” campaign to help maintain demand as economies weaken. Its Johnnie Walker whiskey, the company’s biggest Asian brand, is sponsoring the Vodafone McLaren Mercedes Formula One racing team and star driver Lewis Hamilton to further boost sales.

As well as the recovery of Guinness, Diageo says Baileys and Smirnoff benefited from increased marketing spending and a new Christmas pricing strategy.

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