Diageo, the FTSE 100 drinks company behind brands such as Guinness, Johnnie Walker and Smirnoff, has reported an 8% rise in quarterly sales to £6.3 billion in the three months to March 31. The sales boost, which beat forecasts, was driven by strong trading in Latin America, where sales rose 12% in the quarter.
However, the company's US spirits business continued to struggle, with sales falling 12% in the quarter. This was a significant decline, but analysts pointed out that the US spirits market is highly competitive and subject to fluctuations.
Diageo's results come ahead of the World Cup, which is expected to kick off a surge in beer and spirits sales as football fans stock up on drinks. With the tournament set to be held in Qatar from November 21 to December 18, analysts believe that Diageo's sales are likely to benefit from the increased demand for its products.
Analysts at Jefferies, a US investment bank, said that Diageo's results were 'encouraging' and that the company's exposure to the Latin American and global spirits markets made it well-placed to benefit from the World Cup. 'The World Cup is a key event for the drinks industry and Diageo is one of the biggest beneficiaries,' they said.
Diageo's results also highlighted the company's growing presence in the global spirits market. The company's premium brands, such as Glenfiddich and Tanqueray, continue to perform strongly, with sales rising 10% in the quarter.
While Diageo's results were broadly positive, some analysts noted that the company's US spirits business still faces significant challenges. 'The US spirits market is highly competitive and Diageo is struggling to gain market share,' said analysts at UBS, a Swiss investment bank. 'However, the company's exposure to the global spirits market and its strong premium brands make it well-placed to benefit from the World Cup.'