Diageo FY2023 net sales climbed 10.7% to £17.1 billion for the 12 months to 30 June, with global travel retail sales tracking “materially ahead” of local market performance.

Speaking to members of the press at the recent Don Julio 1942 pop-up launch at Heathrow Airport, Diageo Global Travel Managing Director Andrew Cowan said he was “really happy” with the performance.

“We had a really good year last year,” he said. “We won market share and we grew materially ahead of Diageo. 

“Our numbers are amortised into the domestic markets. So they’re not lifted out for reporting purposes. But if you aggregate those numbers together, we were materially ahead.” 

Cowan cited the slower recovery in travel retail compared to domestic markets as a reason for the strong year-on-year performance. He also noted investments in activation and A&P activity within the channel. 

Diageo FY2023: profits up, volumes down

Across the Diageo business, reported operating profit grew 5.1% to £4.6 billion. However volumes fell by 7.4%.

Net sales gains were delivered across most categories, with Scotch, tequila and beer named as stand-outs. 

Premium-plus brands accounted for 63% of reported sales, an increase of 7% compared to the pre-pandemic 2019. 

Europe and Asia Pacific both delivered “double-digit” growth. The challenging North American market remained “stable”.

Major M&A activity for the year included the acquisitions of Texas whisky-maker Balcones, Philippines-based rum brand Don Papa, and Australian coffee liqueur Mr Black. 

Diageo offloaded Guinness Cameroun, the Archers brand, and its portfolio of franchise brands in India. 

“We have delivered strong fiscal 23 full-year results, with organic net sales growth of 6% and organic operating profit growth of 7%, both within our medium-term guidance,” said new Diageo CEO Debra Crew.

“We expanded organic operating margin by 15 basis points in a challenging cost environment while continuing to invest in the business. 

“These results demonstrate Diageo’s ability to consistently deliver resilient performance, even in challenging macro environments.

Travel retail drives margin

Diageo’s annual report calls out Johnnie Walker’s European performance, which saw 29% growth driven by Northern Europe, Southern Europe and travel retail.

Travel Retail Asia and Middle East net sales climbed 67%, driven by the success of Johnnie Walker Blue Label and Black Label. 

The division contributed to a 363 basis point increase in Asia Pacific’s organic operating margin.

Looking ahead to 2024, Crew said she expected operating environment challenges “to persist”. Cost pressures and geopolitical and macroeconomic uncertainty look set to continue. 

“I see a long runway of future growth opportunities for Diageo to go after with our winning strategy. And, I firmly believe we have an advantaged portfolio to capitalise on, to drive sustainable long-term growth and generate value for shareholders.”

Earlier this year, Cowan said the pandemic “bounce-back” in GTR happened “quicker than expected” in many regions.