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2014 Media Kit

Diageo sees pickup in whisky demand in 2010

By: | at 08:00 PM | International Trade  

Diageo Plc , the world’s biggest spirits group, expects growth in the global scotch whisky market to pickup this year driven by strong demand in emerging markets and less destocking in mature ones.

The London-based group, which makes around one third of its profit from scotch, sees the global market showing higher growth than the 3 percent sales growth in 2009, and the Johnnie Walker whisky maker expects to outperform the global market.

“We are seeing really good growth in emerging markets but also pockets of growth in developed markets,” said David Gates, Diageo’s global category director of whisky in an interview with Reuters.

Gates estimates global sales and volume growth in 2010 will beat 2009’s industry growth figures which showed scotch exports, which make up over 90 percent of the industry, rose 3 percent to 3.13 billion pounds with volumes 4 percent ahead at 1.1 billion bottles.

“Growth will be led by emerging markets where we see no signs of slowing down,” Gates added.

China has shown the highest growth in scotch over the last 20 years with 22 percent annual compound growth in volumes, while Vietnam, Russia and India showed the next biggest growth rates since 1990.

Scotch whisky now accounts for around one third of the 4 million 12-bottle cases of international spirits sold annually in China, and Johnnie Walker is the No 2 scotch in China after Pernod Ricard’s Chivas Regal. [nLDE68K1G].

In Russia, where Diageo’s key brands include White Horse and Bell’s as well as Johnnie Walker, the group now sells one in every two bottles of scotch compared to one in three some three year ago as Russian drinkers have switched from domestic vodka.

Gates said the group saw a 19 percent rise in scotch volumes in its last financial year in Mexico to hold a 74 percent market share as it attracted drinkers away from local tequilas and rums, while it also has a similar market share in Brazil.

He did point out that there are pockets of growth in mature markets such as France, the world’s biggest scotch whisky market, where group scotch sales rose 5 percent last year.

Diageo reported its own scotch sales rose 5 percent in its financial year to end-June 2010. After a fall of 1 percent in its July-Dec 2009 first half due to industry destocking, it saw strong growth in the first six months of 2010 led by Latin America and the duty free market.

The British group has anticipated the upturn in expected scotch demand by spending 40 million pounds to build the first new malt whisky distillery in Scotland for 30 years at Roseilse, near Elgin, in north eastern Scotland.

The plant started making spirit in early 2009 and is set to produce around 10 million litres a year, making it the joint largest individual malt whisky distillery in Scotland alongside Pernod’s recently expanded Glenlivet distillery. (Reuters)