'Protect whisky from Brexit' drinks brand pleads
'Create the conditions to keep what truly is one of the jewel of businesses in the UK and Scotland healthy and thriving' says Diageo chief executive
Global drinks brand Diageo is focusing on protecting its Scotch whisky business and global trade in the wake of the UK's decision to leave the European Union, its chief executive says drinks bran.
"Out of Brexit, our focus is really on ensuring that we keep Scotch whisky healthy. The trade agreements in Europe and around the world. You know, Johnnie Walker (Diageo's leading brand of whisky) was in over 100 markets, long before Coca Cola left the shores of America," according to Ivan Menezes, chief executive of Diageo.
"So our business is built on global trade and that to me is the most important aspect that we keep so the Scotch whisky industry and our business remains competitive and healthy."
"Our message to the Scottish and UK governments is clear: Create the conditions to keep what truly is one of the jewel of businesses in the UK and Scotland healthy and thriving."
Menezes' comments come after the drinks maker reported full-year 2016 preliminary results on Thursday in which it said net profit was £2.24 billion (US$2.95 billion) on full-year sales totaling £10.49 billion (US$13.83 billion).
Diageo, whose brands include Guinness, Smirnoff vodka and Johnnie Walker whisky, said that its organic results had improved with volume growth of 1.3 per cent, net sales growth of 2.8 per cent and operating profit growth of 3.5 per cent.
The company's board recommended a final dividend increase of five per cent, bringing the full-year dividend to 59.2 pence per share.
Menezes said he was "very pleased with the strong set of numbers."
"We grew volume, we grew the top line three per cent organically, we expanded margins for the fifth year in a row and we've upped our dividend five per cent. It's the broad-based resilience that I'm most [pleased about, all our brands are back in growth."
Menezes said North America had performed well and had good momentum, Europe had "done well and the emerging markets are strong," he said.
Scotch whisky is a key component of the drink maker's business; Diageo operates 28 malt distilleries, accounting for nearly one-third of the industry's total capacity. The company's leading brand is Johnnie Walker but it also owns brands such as J&B and Bells, along with an array of single malts, including Cardhu, Talisker, Mortlach and The Singleton.
The decision by the UK in June to leave the EU could throw up some complications for Diageo, however, with wrangling already seen between Scotland (whose electorate voted predominantly to remain in the EU) and the rest of the UK over the decision.
Menezes played down the vote's potential impact on its whisky business, however.
"The UK is only about six per cent of our business and secondly, we have most successful export industry in the food and drink sector: Scotch whisky, which is about 25 per cent of our business, so we are positioned well to keep growing across the global footprint that we have."
Reporting first-half sales in January, Diageo had said that it was seeing good growth but that this was weighed down by foreign exchange rates and the impact of the disposal of assets.
Then, Diageo said that organic net sales in the six months ending December 31 grew 1.8 per cent, on one per cent organic volume growth.