Interface News Reporter | Wu Bingcong
After LVMH and Remy Martin, liquor giant Diageo also submitted performance reports under partial pressure.
On July 30th, local time in the UK, the globally renowned spirits group Diageo released its performance report for the fiscal year 2024 (July 1st, 2023- June 30th, 2024). The data showed that Diageo's global net sales for the fiscal year 2024 were $20.269 billion, a decrease of 1% compared to the previous fiscal year, and a decrease of 5% in global sales. However, its annual operating profit increased significantly to $6.001 billion in the second half of the fiscal year, achieving a year-on-year growth rate of 8% and turning losses into profits overall.
Looking at it by region, North America is Diageo's largest regional market globally. This region continued the slight decline in the first half of the fiscal year, with sales volume experiencing an organic decline of 4% year-on-year and net sales of $7.908 billion, an organic decline of 3% year-on-year. At the same time, operating profit decreased by 2% year-on-year.
Latin America and the Caribbean region also showed signs of fatigue, with sales volume experiencing an organic decline of 16% year-on-year, net sales of $1.839 billion, an organic decline of 21% year-on-year, and operating profit declining by 36% year-on-year.
In addition, Diageo's net sales in the second largest regional market, Europe, were $4.804 billion, an organic growth of 3% year-on-year; The net sales of the Asia Pacific region, the third largest regional market, were 3.817 billion US dollars, with an organic growth of 4% year-on-year; The net sales in Africa were 1.778 billion US dollars, an organic increase of 12% year-on-year.
Overall, Diageo performs well in Europe, Asia Pacific, and Africa, with Africa being the best. The growth in the above three regions has to some extent compensated for the decline in the entire Americas region. Diageo stated in the report that the 2024 fiscal year was mainly affected by a significant decline in performance in Latin America and the Caribbean. Excluding this region, net sales increased organically by 1.8%.
Focusing on Diageo's performance in Greater China, the company has experienced varying degrees of decline in its retail channels in Australia, Southeast Asia, North Asia, the Middle East, and tourism. However, it has achieved double-digit growth in sales volume and revenue in Greater China, with potential growth of 14% and 12%, respectively.
Diageo's good performance in the Greater China market has driven significant growth in the Asia Pacific region, contributing to its global performance boost.
From a product perspective, the three major categories of products under Diageo are spirits, beer, and ready to drink beverages. Among them, spirits contain a wider range of products, including Scottish whisky, tequila, vodka, etc. Spirits are also a key focus of Diageo's business. During the reporting period, the company's net sales of spirits, beer, and ready to drink beverages accounted for 78%, 16%, and 4%, respectively.
Specifically, beer has seen an increase in sales volume and net sales revenue, with organic growth of 5% and 14% respectively, while the sales volume and revenue of spirits have decreased by 5% and 4% respectively; The sales volume and value of ready to drink beverages decreased by 7% and 1%, respectively.
It is worth noting that Chinese Baijiu with the Swellfun brand as the core has achieved significant growth. The sales volume and volume of this category have organically increased by 32% and 27% respectively, accounting for 3% of Diageo's overall net sales in fiscal year 2024.
Looking ahead to the new fiscal year, Diageo is cautious about the market environment for the 2025 fiscal year and expects the consumer environment to remain challenging. The company stated that they believe organic net sales growth will recover as the consumer environment improves.
Recently, Diageo has started to "slim down" to cope with global performance pressures. The company announced the sale of the Venezuelan rum brand Pampero to Italy's Gruppo Montenegro at an unknown price. Diageo Europe President John Kennedy stated in a public statement that this move will allow the company to focus more on its "core areas of strength" in its investment portfolio.
In the future, Diageo's development goal is to restore organic net sales growth of 5% to 7%, but the company has also made a prediction that its organic operating profit margin will still face some pressure in the 2025 fiscal year.