Diageo’s premium focus boosts sales

Diageo, which owns Smirnoff, Guinness and Johnny Walker, has reported a rise in sales and volume for year ended 30 June 2011, driven by premium whisky brands and emerging markets.

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The drinks maker says group sales rose 2% to £9.9bn and volumes increased 3%.

Diageo says it increased its marketing spend by 8% to £1.5bn for the year which equates to 15.5% of net sales. Spend was focused on emerging markets and spirits brands in the US.

Marketing spend in Europe fell 5% to £390m during the year, which Andrew Morgan, president of Diageo Europe says was focused on “the biggest opportunities” such as rolling out its rum brand Captain Morgan to new markets and driving premium spirits.

Performance in Europe was affected by challenging conditions in Spain and Greece, but UK sales increased 2% where marketing investment actually increased, to focus on “super premium brands” and innovation.

Paul Walsh, chief executive of Diageo, says: “We have strengthened the business, investing more behind our brands and in our routes to market and we have deepened our leading brand and market positions in the fastest growing markets of the world.”

The company is currently overhauling its European business which has seen former managing director of Great Britain Simon Litherland leave the company and all territory marketing director roles scrapped.

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