By James Atkinson

Diageo Australia grew net sales three per cent last year, despite a volume decline of four per cent attributed by its parent company to the termination of the Jose Cuervo tequila contract.

Cuervo's contribution was stripped out of Diageo's organic net sales and volume figures for the financial year ended June 30, because it won't be part of the company's portfolio in the 2013-14 financial year.

Diageo said Jose Cuervo – now distributed in Australia by Think Spirits – contributed global net sales of £308 million ($521 million) and operating profit of £76 million ($129 million) last year. 

Diageo said net sales growth of three per cent in Australia was "mainly due to price increases across the core brands and a focus on premiumisation". 

"The ultra premium segment grew 22 per cent overall with Cîroc and Ketel One vodka growing net sales 91 per cent and 22 per cent, respectively," the company said.

"Net sales growth of eight per cent was delivered in Scotch, mainly driven by Dimple and Johnnie Walker Blue Label." 

Diageo said Smirnoff grew net sales seven per cent in this market on the back of price increases, despite a volume decrease of 12 per cent.

Increased marketing investment behind Gordon's and Tanqueray delivered solid growth in the gin category contributing 22 per cent to Australia's overall growth. 

Net sales growth for the Bundaberg brand was relatively flat at one per cent, but emerging rum brand Captain Morgan grew net sales 85 per cent, which Diageo said was achieved by capitalising on the increasing popularity of spiced rums. 

Across the Diageo group, net sales were up five per cent over the period to £11.43 billion ($19.33 billion).

RTD hit with volume, sales decline 

Diageo said ready-to-drink volume and net sales decreased seven per cent and one per cent respectively in Australia due to price increases taken during the year. 

"The higher duty compared to beer and cider continued to hinder the category and the launch of new variants with lower ABV helped to soften the decline," the company said.

Diageo said it remains Australia's category leader in Scotch, gaining a further 1.9 percentage points share during the year.

Designated driver campaign launched

Also this week, Diageo Australia launched a 'designated driver' advertisement featuring the Captain Morgan brand.

The advertisement features the brand's forefather, Captain Henry Morgan and his crew being rowed back to their boat by their own designated driver, ending with the tagline 'Designate a driver, Captain's orders'.

Click 'play' on the video below to watch the advertisement, which will run on YouTube and in cinemas for six weeks.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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