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World's largest distiller got some of its best growth from beer in the back half of 2023, including in US. Diageo Beer Co USA volume grew 2% in global co's fiscal 1st half (Jul-Dec), it reported this morn. Net sales for co's US beer biz grew 5%. It's biggest beer brand globally, Guinness, drove those results, up identical 2% by volume, 5% by $$ in US last yr, Diageo reported. These results suggest strong gains for the brand on-premise, in indie accounts and at its taprooms, including new Chicago site, given softer trends in off-premise scans. Cases Off 2%, $$ Up 2% in Scans Total DBC USA cases dipped 2.1%, $$ +1.8% in 2023 Circana multi-outlet + convenience data. Its trends moderated just slightly in 2d half in this data. Smirnoff brand fam grew $$ 5%, vol +1.2%. Guinness is more developed in food stores, a tuffer environment overall, where brand fam $$ inched up 1.6% on a near 3% volume decline. Lead brands got solid $$ growth in the channel, plus new non-alc 0.0, suggesting softness for Blonde and beyond.Global Net Sales -0.6% Organically; Profit Hits from 23.5% Drop in LatAm Globally, Diageo's organic net sales dipped 0.6%, $67 mil, to just under $11 bil on a 5.2% volume decline. Overall, price/mix recovered almost 90% of volume losses, but exchange rates and a net-negative from acquisitions and disposals dragged co's reported net sales down further. Organic oper profit dropped 5.4%, dragging oper margin down 1.67 pts.Biggest hit to co's results came outta Latin America, recall. By end of the half, net sales fell by 23.5%, responsible for over 2/3 of global co's organic oper margin decline. The incident once again received extensive attention from ceo Debra Crew and cfo Lavanya Chandrashekar on co's call this morning. Pull out LatAm and global net sales grew 2.5%, co reported, as Europe grew 3.4%, Asia Pacific +5.9%, Africa +9.3%. Co's largest mkt, North America, still 37% of global Diageo revs, saw organic net sales dip 1.5%. Notably, co's global gross margin was positive and, even including LatAm, the combo of price increases and efficiency programs "more than offset cost inflation in absolute terms," co wrote in 1st half report.North American Spirits Soft as Pricing "Intensified," Shed Share of Alc Bevs in US Diageo's total North American volume dipped 3% in its fiscal 1st half, revs down 2%. But co increased its mktg spend in the region by 2% organically, an increase of $12 mil to $782 mil, or over 19% of its North American net sales. Oper profit before exceptional items slipped 1% organically. Stronger beer sales offset "weaker performance" in spirits, including tequila -5%, Crown Royal -2%, vodka -4%, Johnnie Walker -13% and Captain Morgan -2%. Other whiskey brands did better, while co's RTD biz grew by 33% (tho still quite small), driven by bottled cocktails.With total spirits up low singles in the 2nd half of 2023, Diageo estimates it lost 0.17 share of total alc bev biz in the US after 3 yrs of gaining share here, leading to a share decline globally in its 1st fiscal half, Debra showed this morn. "Overall, price competition has intensified in the US, particularly impacting whiskey and tequila," she said. Notably, tequila depletions grew, even if shipments were down. Consumer trends are "still normalizing" post-Covid, with economic "headwinds" leading to more "cautious and choiceful" buying decisions. Tho "premiumization continues," in the US, Debra sees "some pockets of downtrading."Globally, co's beer volume grew 3%, with net sales up a very strong 14%, in part thanks to much bigger pricing activity in Europe and Africa, where beer is about 1/4 and over half of co's biz, respectively. Guinness volume slipped 1% globally, but revs were up double digits organically. Guinness 0.0 more than doubled in the half, contributing 14% of Guinness net sales growth. The non-alc brand was about 4% of Dublin-brewed Guinness.

Guinness Gain Drove Diageo Beer Co USA Volume +2% in Fiscal 1st Half as LatAm Hits Global Co

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