|Diageo Beer sales continue decline
|Posted: February 26 2007
Continuing decline in on-trade beer volumes contrasted with off-trade beer and wine sales here in the six months to December 31st, according to Diageo’s Interim Results for the six months to the end of 2006. A widening consumer repertoire plus a greater sensitivity to value - particularly in the off-trade - meant that Diageo Ireland’s net sales of beer were down three per cent while net sales of spirits and wine were both up five per cent.
Overall, total volumes at Diageo Ireland declined three per cent while net sales declined two per cent in the six months to the end of the year.
Nevertheless, Guinness continues to be Ireland’s number one beer “by a wide margin” according to Michael Patten, Group Corporate Relations Director at Diageo Ireland, “More than 40 per cent of all draught beer sold in Ireland is a Guinness”.
The rapid and significant social and lifestyle changes underway in Irish society are transforming the alcohol beverages market, he added.
“These changes include a shift in consumption from the on-trade to the off-trade channel (one in two alcohol beverages are now consumed at home), a shift in consumer behaviour towards drinking a wider range of product types (beer, wine, spirits) and a decline in per capita alcohol consumption especially in older consumer groups. Seasonality is also an increasing factor in determining consumer choice.
“We are responding to these changes in the market. Our strategy is to continue to promote the pub as a unique and valued centre of socialising in Ireland, to continue marketing the uniqueness and distinctivity of Guinness to consumers and to grow in the at-home market.
“We invest €50 million per annum in Guinness quality assurance in Irish pubs, equating to 160,000 routine quality visits annually. Our innovation activity around Guinness such as Brewhouse is driving trial and meeting new consumer needs.
“Consumer research demonstrates that Guinness performs ahead of its competition in terms of consumer favourability and quality scores. Our retention and recruitment of Guinness consumers is now stable for several years.”
At parent company Diageo plc, there was a four per cent organic growth in volumes with a net organic sales increase of six per cent, for the six months to December 31st 2006. On a reported basis net sales increased by £62 million from £3.96 billion in the six months ended 31st December 2005 to £4.02 billion in the six months ended 31st December 2006/smaller>/smaller>/fontfamily>.
/smaller>/smaller>/fontfamily>According to the company, strong growth in Continental Europe has been offset by weakness in Great Britain, Ireland and Spain. Operating Profits remained unchanged at £500,000 in Europe on net sales of £1.4 billion.
As a result volumes were down five per cent with net sales down two per cent.