By Scott Wright

DIAGEO has toasted a “star” showing by Scotch whisky brand Johnnie Walker as it declared sales have been boosted by the recovery of the on-trade from the pandemic.

The spirits giant declared that it sold more than 21 million cases of its flagship blended Scotch globally in the year to June 30, as the brand saw a 34 per cent rise in sales.

The growth of Scotch whisky brands was a key driver as Diageo booked a 21.4 per cent rise in net sales to £15.5 billion, with the company highlighting a continuing benefit from a trend towards “premiumisation” – luxury brands – among consumers.

Chief executive Ivan Menezes acknowledged there could be a “potential weakening of consumer spending power” in the current year, noting that “volatility related to Covid-19” and “global geopolitical and macroeconomic uncertainty” will contribute to challenging conditions.

But the company, which lifted operating profits by 18.2% to £4.4bn, has yet to see the impact of the growing cost-of-living crisis on sales.

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Diageo told the City its growth in the year to June 30 had been broad-based across all categories, highlighting strong contributions from Scotch, Tequila and beer, and geographical markets. Latin America was said to have had a “phenomenally” strong year for whisky, with the Old Parr and Buchanan’s brands standing out.

Ewan Andrew, Diageo’s president of global supply chain and procurement, told The Herald that Scotch whisky, which accounts for around one-quarter of the company’s global sales, had grown 29% over the period, declaring: “Johnnie Walker really has been the star within that. We are really calling out what a breakthrough year that is. We are through 21 million cases of Johnnie Walker [sales] globally – that is a huge amount of volume it is selling.

“John Walker would certainly be really proud of that, if he was thinking that the business that he started a couple of hundred years ago was at that level of global scale, and still has that strong momentum for growth.”

Diageo said its performance during the year had been driven by the continued recovery of the bar trade following the easing of Covid restrictions, as well as resilient demand in the off-trade. It highlighted gains in market share, adding that it had increased its presence in the total beverage alcohol market at the expense of beer and wine.

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Asked if the company had detected any impact from surging inflation, Mr Andrew replied: “We are not seeing it yet. We don’t do short-term guidance, but the medium-term guidance is sitting there at top-line growth of five to seven per cent, [and] improving our profitability up to six to nine [per cent].

“The premiumisation trend, which is a long-dated global trend, continues.”

When asked if Diageo had passed on price prices to the trade, Mr Andrew said while the firm was “well used” to dealing with supply-chain volatility, “we are not immune to it”.

“We have to look at how we manage that in the context of each of our markets,” he said. Noting that some price rises had been put through, he said: “We believe they are at a level people would still be willing to pay.”

Diageo is nearing the end of a £185m capital investment programme to upgrade visitor facilities across Scotland, which included the development of the Johnnie Walker Princes Street attraction in Edinburgh. Cardhu, Glenkinchie, Singleton at Glen Ord and Brora have relaunched, with Talisker and Caol Ila poised to reopen in the coming weeks.

Diageo is currently adding 50 roles to its distilleries across Scotland after increasing production cycles from five to seven days per week.

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