SPIRITS giant Diageo has announced double-digit percentage sales growth for its leading whisky brands Johnnie Walker and Buchanan's, just weeks after unveiling plans for another large distillery, as the group posted a 4% rise in sales for the first three months of 2013.

The group saw strong performance in the US, driven by price rises, and gains in market share across much of Asia, but whisky sales fell in South Korea and western Europe continued to be weak.

Chief executive Paul Walsh said: "Strong performance from our biggest business, US spirits; the continued growth of spirits in Africa; share gains across our markets in Asia Pacific; and double-digit growth of Johnnie Walker, Crown Royal, Buchanan's, and Tanqueray are the highlights of the quarter.

Loading article content

"Given our market positions and geographic diversity, we remain confident that Diageo's performance continues to be in line with our medium-term guidance."

Diageo's shares rose 3.5p or 0.2% to 1978p.

The mixed picture chimes with figures from the Scotch Whisky Association earlier this month showing whisky exports edged up by just 1%, albeit to a record £4.27 billion in 2012, on the back of a 5% fall in the number of bottles sold. The minimal industry growth last year came after a 23% leap in overseas sales in 2011.

Diageo said that its US spirits business delivered another "strong performance" in the first quarter of 2013, the third quarter of its financial year, as it continued to benefit from previous price rises. But the company indicated that there had been little improvement in western Europe where the economy continues to ail, which has put whisky brand J&B, popular in France, Spain and Greece, under pressure. "Underlying trends in western Europe remain unchanged," Diageo said.

"The stronger performance in the quarter was due to the comparison against a weak third quarter in the prior year in France, an earlier Easter in 2013 and shipment phasing in Spain which is expected to reverse in the fourth quarter."

In east Africa, a key market for Diageo's Guinness brand, it said sales had weakened in Nigeria and there was a "short-term impact" from Kenya's elections.

"Performance in Latin America and Caribbean moderated as consumer weakness in Brazil impacted performance despite share gains," Diageo said. The company continues to see falling whisky sales in Korea, where Windsor is its leading Scotch brand, having been embroiled in a long legal case in the country. It said the timing of previous price rises weighed on the most recent numbers elsewhere in Asia.

The update comes as Diageo prepares to boost its distribution might in Asia by taking a stake in Vijay Mallya's Indian-based drinks business United Spirits.

Mr Walsh said: "Our performance in the quarter was robust and again demonstrates Diageo's strengths, global reach and category breadth and depth.

"Therefore despite consumer weakness in three markets – Korea, Nigeria and Brazil – Diageo's performance for the nine months is in line with the first half and our expectations."

Phil Carroll, analyst at Shore Capital, said: "This is a solid update from Diageo, albeit there has been moderating growth in a number of markets."

Analysts at Canaccord Genuity raised their target price on the stock to 1900p from 1670p but maintained a "hold" rating.

Diageo recently set out plans for a £50 million malt whisky distillery at Teaninich, in Easter Ross, which would have the capacity to produce 13 million litres of alcohol a year.