Diageo reports flat European sales

The importance of Diageo’s current marketing campaigns for Smirnoff and Guinness alongside the upcoming media drive for its top brands across Western Europe have been laid bare after the drinks maker reported flat sales for the region in its latest quarter.

Diageo is banking on just launched campaigns for its top brands to fuel growth over the coming months.

The world’s largest drinks maker posted a 1.1 per cent year-on-year decline in revenue across Western Europe for the three months to 30 September. It predicted a low single digit sales decline for the full year in the region.

The company will be hoping upcoming marketing initiatives can drive demand. It is rolling out a £12m push for its flagship Guinness brand in the UK, as well as unveiling new brand platforms for its Johnnie Walker, Bailey’s and Smirnoff drinks over the festive period in the hopes of driving growth in 2014. Additionally, it is banking on savings in promotional and point-of-sale spend in the coming months to help fund a major media drive for its brands that it claims will change its “route” to consumers.

Diageo’s Western Europe dip was reflected on a global scale, with the business revealing that a 3 per cent year-on-year jump in sales was tempered by a slowdown in emerging markets.

Ivan Menezies, chief executive of Diageo, says: “While there are headwinds in some emerging markets, including the impact of the governmental policies in China, there are also markets in which we continue to deliver robust growth.”

Separately, SABMiller posted a 5 per cent jump in UK volumes for the three weeks to 30 September as campaigns for Peroni and Pilsner Urqell helped spark demand for the business. The brewer, which is primarily focused on growing its premium beer brands, is rolling out a cross-brand social media strategy to drive sales through word-of-mouth marketing.

The UK performance influenced a smaller than expected 2 per cent decline in volumes across Western Europe over the same period. SABMiller suggests the drop would have been less if bad weather across the region had not impacted its planned innovation launches.

Alan Clark, chief executive of SABMiller, says: “Following a challenging start to the year, trading conditions in Europe and North America saw a modest improvement in the second quarter, although the consumer environments here are expected to remain under pressure.”

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