Diageo lifts forecasts as reopening of bars and pubs buoys sales

Spirits giant Diageo has lifted its trading forecasts after strong sales in the US drove a “good start” to the current financial year.

The Johnnie Walker and Guinness owner said it has been buoyed by “robust demand” in the off-trade, which covers supermarkets and retail stores, despite the continuing impact of the coronavirus pandemic.

Ivan Menezes, chief executive of the company, said it has also benefited from the gradual reopening of pubs and bars in most markets, with the pace of its recovery in different regions being driven by the easing of restrictions.

US trading has been “ahead of our expectations” due to resilient consumer demand and continued growth in spirits sales, it said.

It said an increase in retailer confidence has seen higher stock levels in supermarkets and stores, while bars and restaurants have now reopened in all US states.

Off-trade sales have been robust across Europe, while it has also benefited from the easing of lockdown restrictions on bars, pubs and restaurants across the continent.

Diageo said travel retail has been “severely impacted” by the pandemic, with travel restrictions hammering passenger numbers.

In China, the company has seen sales continue to recover, although larger events and banquets have been returning particularly slowly.

Mr Menezes said: “Our outlook for the first half of fiscal 2021 has improved since the year-end, reflecting the good start to the year, particularly for our US business.

“I am pleased with the resilient performance of our business in the current challenging operating environment and encouraged by our progress.

“While the pace of recovery is uncertain, I am confident in our strategy, the long-term fundamentals of our business and Diageo’s ability to emerge stronger.”