US and Europe shun premium brands

first_img KCS-content whatsapp Thursday 26 August 2010 8:39 pm Share by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeMoneyPailShe Was A Star, Now She Works In ScottsdaleMoneyPailNoteabley25 Funny Notes Written By StrangersNoteableyZen HeraldThe Truth About Why ’40s Actor John Wayne Didn’t Serve In WWII Has Come To LightZen HeraldBetterBe20 Stunning Female AthletesBetterBeCrowdy FanShe Didn’t Know Why Everyone Was Staring At Her Hilarious T-ShirtCrowdy Fanautooverload.comDeclassified Vietnam War Photos The Public Wasn’t Meant To Seeautooverload.comAtlantic MirrorA Kilimanjaro Discovery Has Proved This About The BibleAtlantic MirrorBrake For ItThe Most Worthless Cars Ever MadeBrake For ItTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal Past whatsapp Show Comments ▼center_img US and Europe shun premium brands RECEIVED wisdom tells us that hard-pressed customers hit the bottle in times of economic woe. If they’re doing that this time round, they aren’t reaching for Smirnoff Vodka or Johnnie Walker whisky. Save for a 13 per cent rise in net sales at the international division, which accounts for Africa, South America and the Middle East, Diageo’s full-year numbers are pretty lacklustre. In theory, Diageo should boast high operational gearing, but it isn’t evidenced by these results: overall organic sales growth was just two per cent, while organic profits grew by exactly the same amount. This was partly due to higher marketing spend, which was increased by 50 basis points (pretty expensive marketing when you consider the anaemic sales growth). However, the main drag on profitability was stubbornly sluggish trading conditions in North America, which still accounts for a worrying 40 per cent of profits, and Europe. In these regions, customers are shunning premium brands, or buying them in supermarkets and off-licences, where Diageo’s margins are much lower. In North America, net sales were off three per cent while Europe dipped by two per cent. These results don’t inspire confidence, and management is far from bullish on the firm’s prospects, promising “improved” organic profit growth in the year ahead (an effective downgrade to the four to five per cent pencilled in by analysts).In the long-term, Diageo will come good. Emerging markets are falling in love with prestige alcohol brands, and iconic products like Guinness will thrive. But rising unemployment and spluttering economies in Diageo’s biggest markets make it impossible to recommend these shares. [email protected] More From Our Partners UK teen died on school trip after teachers allegedly refused her pleasnypost.comAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.orgBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.comPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.orgRussell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.orgKiller drone ‘hunted down a human target’ without being told tonypost.comSupermodel Anne Vyalitsyna claims income drop, pushes for child supportnypost.com980-foot skyscraper sways in China, prompting panic and evacuationsnypost.comWhy people are finding dryer sheets in their mailboxesnypost.comI blew off Adam Sandler 22 years ago — and it’s my biggest regretnypost.comFlorida woman allegedly crashes children’s birthday party, rapes‘Neighbor from hell’ faces new charges after scaring off home buyersnypost.comMark Eaton, former NBA All-Star, dead at 64nypost.comFeds seized 18 devices from Rudy Giuliani and his employees in April raidnypost.comMatt Gaetz swindled by ‘malicious actors’ in $155K boat sale Tags: NULLlast_img read more

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