Diageo, the drinks agency behind Guinness and Johnnie Walker whisky, mentioned it was retaining one eye on the North American cannabis business, as hovering gin and tequila gross sales helped increase earnings.
Pretax revenue rose by 12% to £4.2bn on the again of gross sales that have been almost 6% greater at £12.9bn, triggering plans to return £4.5bn to shareholders over the subsequent three years.
By far the best-performing spirits in Diageo’s steady have been gin and tequila. Led by its Tanqueray model, gin gross sales have been up 23%, whereas tequila grew by 37% due to the surging recognition of its Don Julio label.
A whisky tie-up with Recreation of Thrones that spawned White Walker by Johnnie Walker helped increase scotch, which accounts for 1 / 4 of the corporate’s internet gross sales, by 6%.
Diageo has to date shied away from the technique taken by rivals such because the US drinks agency Constellation Manufacturers, which purchased 40% of the world’s largest cannabis agency Cover Development to safe a foothold within the fast-growing business.
However Diageo’s chief govt, Ivan Menezes, mentioned the corporate couldn’t rule out following swimsuit, relying on how the market develops for cannabis, which is authorized in Canada and a few US states.
“On cannabis we’re simply monitoring it, it’s at a really early stage,” mentioned Menezes, who has been at Diageo since 1997. “We’re trying on the sector, it’s nascent and we simply need to perceive the patron behaviour.”
He added that Diageo’s enterprise didn’t seem to have been affected by the legalisation of cannabis in elements of the US, tallying with analysis suggesting drinkers haven’t switched in massive numbers to smoking marijuana.
Menezes additionally mentioned Diageo had no must comply with within the footsteps of multinational beer corporations by shelling out for a craft brewery.
“The final word craft brewer is Guinness,” he mentioned.
Diageo has spent £150m on a brand new Johnnie Walker customer centre in Edinburgh, which it plans to open in time for the scotch model’s 200th anniversary subsequent 12 months.
However the plans have been barely overshadowed by the specter of strike motion throughout its Scottish operations. The corporate mentioned it was nonetheless speaking to unions, who rejected a contemporary pay supply this week, and hoped to have the ability to attain a deal.