Diageo's UK sales down 5 per cent

Diageo’s UK sales dropped 5 per cent in the year ending June 2007 due to poor sales of RTDs and beer and slow spirit sales in the run up to Christmas.

The drinks giant saw sales of Smirnoff Ice drop by 14 per cent and Guinness by 3 per cent, results the company said were in line with current trends in both categories.

However, despite sales being down for the majority of Diageo’s main brands in the first half of the year, performances improved “significantly” in the second half and globally the company saw sales rise by 7 per cent to £7.5 billion.

Baileys suffered the most in the first half of the year as the company used a different price strategy to boost case sales in the off-trade over the Christmas period. However, increased promotions during the second half of the year led to sales rising by 12 per cent.

Although volume sales of Smirnoff dropped 1 per cent in the first half, value sales went up by 1 per cent as a result of price increases. A combination of sales execution and brand building initiatives in the second half of the year meant sales were boosted further with volume up 10 per cent and value up 11 per cent.

Gordons and Bells were also affected, but performance improved “significantly” during the second half of the year with a 10 per cent volume and 6 per cent value increase.

Sales of category brands such as Pimms, Blossom Hill and Piat d’Or stayed flat as growth in the first two brands offset declines in the third.

Diageo chief executive Paul Walsh said the company was increasing its guidance for organic operating profits growth in the 2008 financial year to 9 per cent.

He said: “Whilst we watch for any impact the current volatility in financial markets may have on broader trading conditions, the investments we have made in brands and markets this year have created an even stronger platform for the future.”