Guinness, Margarita Mixes Lead Diageo FY 12 Sales Growth

The world’s largest distiller, Diageo (NYSE:DEO), reported on Thursday stronger sales for fiscal 2012 as greater increases in marketing boosted demand in North America for Guinness, ready-to-drink Jose Cuervo Margarita mixes and Ciroc.

The U.S. improvements helped offset continued weakness in Europe, Diageo said.

Andrew Morgan, president of the company's Europe division, said the economy there remains “very uneven.” While sales improved in Russia, some countries in Eastern and Northern Europe and Turkey, Morgan said Southern Europe “remains challenging.”

The London-based maker of Johnnie Walker, Baileys, Smirnoff vodka, and Captain Morgan rum said net revenue for the year ended June 30 grew 6% to 10.7 billion pounds ($17 billion) from 9.9 billion pounds a year ago.

Volume climbed 6% while sales across all brands improved except for Crown Royal, its wine segment, Jose Cuervo and Tangueray.

In North America, sales growth in the U.S. of 7% was led by strong demand for Ciroc, which increased 61% year-over-year. Guinness sales more than offset softness in other beer brands, while Diageo’s ready-to-drink segment, which includes Jose Cuervo Light Margarita, returned to sales growth during the quarter.

While the wine business posted lower sales, Diageo said the unit’s restructuring was completed during the quarter. The company noted that wines “continue to play a valuable role in the route to market” but added that it “remains a challenging category” with intense pricing pressure.