Diageo increases marketing investment despite ‘economic uncertainty’

Diageo has increased its global marketing investment by 5.6%, according to financial results for the year to 30 June 2023.

The drinks giant’s results showed marketing spend climbed to £3bn, up on £2.7bn in the same period of 2022.

The results revealed net sales of £17.1 bn, up 10.7%, and operating profits of £4.6bn, up 5%. 

Diageo said that these figures reflected a “strong organic net sales growth, and favourable impacts from foreign exchange”.

In Europe marketing spend increased 7% "with focused investment in Tanqueray, Johnnie Walker, Baileys and Guinness", while in North America it grew 2%.

The business also invested £1.2 bn of capital expenditure in supply capacity, sustainability, digital capabilities and consumer experiences.

Looking ahead into 2024, Debra Crew, chief executive of Diageo, said she expected “operating environment challenges to persist, with continued cost pressure and ongoing geopolitical and macroeconomic uncertainty”.

Crew added that this meant the brand would “move with greater speed and agility” focusing on “bolder and faster innovation” while driving its scotch and tequila brands as well as Abbott Mead Vickers BBDO client Guinness.

She said this was due to double-digit organic net sales growth in these categories.

Diageo also gained or held share in more than 70% of total net sales value across its measured markets throughout the year.

Crew added that these results “demonstrate Diageo’s ability to consistently deliver resilient performance, even in challenging macro environments”.

Fifty-seven percent of Diageo’s overall organic net sales growth was through its premium-plus brands, indicating the influence premiumisation has on the drinks giant's performance.

There was growth in four of its five regions, with Europe and Asia Pacific growing double-digit.

Throughout the fiscal year it acquired brands including Australian premium coffee liqueur Mr Black, Texas craft distiller and producer of American single malt whiskey Balcones Distilling, and a dark rum from the Philippines called Don Papa Rum.

The results revealed the brand’s commitment to sustainability, reducing its Scope 1 and 2 greenhouse gas emissions with a further 5.4% reduction compared to 2022. This also involved a 14.7% improvement from its 2020 baseline.

Crew said: “Fiscal 24 marks the start of Diageo's next stage of evolution, and it is an incredible privilege to be leading the company through it.

"I believe total beverage alcohol (TBA) is an attractive sector underpinned by strong consumer fundamentals, including population growth, increased spirits penetration, and resilience in premiumisation globally.

“I see a long runway of future growth opportunities for Diageo to go after with our winning strategy. And, I firmly believe we have an advantaged portfolio to capitalise on, to drive sustainable long-term growth and generate value for shareholders."

Ivan Menezes, former chief executive of Diageo, passed away in June after a short illness at the age of 63.

Crew said: “I am also proud of how our Diageo family has come together in recent weeks following the loss of our much loved and respected former CEO, Sir Ivan Menezes.”