Profits plunge for Guinness owner Diageo after Covid lockdown | Business

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Drunkers locked up in the UK started buying alcohol online and cooking with Baileys, but that wasn’t enough to prevent the profits of Guinness and Smirnoff owner Diageo from falling as Covid-19 forced the closure of pubs and bars.The global beverage company’s operating profit fell 47% to £ 2.1bn from the end of June, with most of the damage done in the past three months as countries around the world imposed strict locking rules.

Sales fell 9% to £ 11.7 billion for the year, but fell 23% in the quarter most affected by the closure of restaurants, clubs, pubs and bars that sell Diageo drinks.

As a result, the company, which also owns Johnnie Walker, was forced to reduce the value of its brands by £ 1.3 billion.

The company’s UK director Dayalan Nayager said Britons enduring the lockdown were found to be particularly fond of gin and spirits for DIY cocktails, with Google searches for cocktail shakers more than six times as many.

The UK branch of Diageo also saw a 7.5% increase in Baileys sales after taking advantage of the home baking trend by promoting recipes using cream liqueur.

Diageo chief executive Ivan Menezes said the company has been working hard to sell more drinks directly to home customers, including through online retailers such as Amazon.

Menezes said online sales still only made up a “small single-digit percentage” of Diageo’s revenue, but doubled in size between the third and fourth quarters of the year.

While sales fell more than 30% in all other regions, revenues in North America fell just 1% as tequila sales rose sharply. Menezes attributes this to the fact that only 20% of Diageo’s sales in the United States come from bars, restaurants and other hospitality venues.

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The company’s North American operations also benefited from strong growth in premium spirits, which generate higher revenues.

The Diageo boss said he hopes Donald Trump will rethink a 25% tariff on single malt Scotch, imposed last year in a trade dispute with the EU, and avoid imposing other levies.

Menezes said: “We are working very hard with the United States, the United Kingdom and Europe to reduce, to defuse the tariff threat on spirits.

“I think at a time like this, when the hospitality industry – one in 10 jobs in the world – needs to recover, penalizing the alcohol industry will only hurt small businesses around the world.

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