By Andrew Starke
Sales of premium scotch and beer are driving Diageo’s growth in the Asia Pacific region with Johnnie Walker a star performer in Australia and other key Asian markets.
Diageo president: Asia Pacific, Gilbert Ghostine, said the 2010 financial year had seen organic net sales grew 1 percent across the region, marketing spend increased by 3 percent and organic operating profit up 6 percent.
“What a difference a year makes,” he told analysts. “Many of the economies in the region have returned to growth following the global downturn and as I predicted last year, we have returned our Asia Pacific business to growth.”
Ghostine believes Diageo is well placed in the region to leverage off the growth opportunities for the increasing middle classes, the increasing beverage alcohol consumer base and the increasing importance of digital that this region presents both in financial year 2011 and beyond.
“We are winning in deluxe scotch and beer,” he said. “Scotch is the largest international spirits category in Asia Pacific and we gained share in scotch in most markets.”
Diageo has an alliance with Kirin and Asia Pacific Breweries in the region which Ghostine said has strengthened its route to market and improved the performance of premium and super premium brands.
In Australia, Johnnie Walker was the star performer with strong share gains and net sales growth.
But overall market performance locally was hampered by decline in volume and net sales in an increasingly competitive market for spirits and ready-to-drink.
“The second half (of FY 2010) in Australia was very competitive mainly on pricing,” said Ghostine.
“We see this improving a little bit in the first quarter of fiscal 2011 and I think the good story in Australia is that at the end of May we are gaining share again in this market. So I am more optimistic about the outcome for Australia in the first half, but the market remains competitive but not as aggressive on pricing as in the second half of FY 2010.”
Ghostine declined to comment on whether Diageo would be interested in acquiring the Foster’s Group beer business.