By Andrew Starke
Australia is likely to be part of a regional boom as growth in emerging Asia Pacific markets, led by China, India and southeast Asia, promises to kick-start the global spirits industry.
Diageo CEO Paul Walsh last week released an interim management statement for the nine months ended 31 March 2011, which revealed good growth in Asia-Pacific and International markets offset by relatively flat growth in Europe and North America.
‘Trading in the third quarter was in line with our expectations that the second half would be stronger than the first,” he said.
“In North America consumer trends are improving, albeit modestly, and Diageo’s scotch, vodka and tequila brands performed strongly in the quarter.
“Better mix and lower discounts offset volume decline to drive top line growth.
“Overall trading in Europe continues to be challenging although in the quarter stronger price/mix in Great Britain and Russia offset weaker price/mix in Ireland and Greece and a deterioration of the on-trade in Spain.
“Further improvement in price/mix in both International and Asia Pacific in the quarter were driven by the continuing strength of our scotch brands especially around Chinese new year, improving trends for our beer brands in Africa, especially in Nigeria, and stronger growth in South Africa and Australia.”
In March the world’s largest spirits company revealed it was investing heavily in emerging markets with Walsh predicting these fast-growing regions will account for half of its sales in three to five years time.
Yesterday (May 16) Diageo's Asia Pacific President Gilbert Ghostine told Reuters that the spirits giant expects to garner a fifth of its sales from Asia Pacific by 2015 to nearly double the region's contribution driven by fast-growing China, India and southeast Asia.
Currently Diageo makes 12 percent of its global sales in Asia Pacific.
"We will be 20 percent of Diageo by 2015 due to the faster organic growth in these three emerging Asian markets and inorganically through acquisitions," he told the news agency.
Figures to the end of March put growth in the region, which stretches from Australia to Japan, at 9 precent with China, India and southeast Asia leading the charge with growth rates closer to 20 percent.