Ready-to-drink sales fizzle in new Diageo results

Posted by AFN Staff Writers on 11th February 2013

Diageo Australia’s half-year results up to December 31, 2012 show that the ready-to-drink beverage category has continued to plummet.

The latest results show that sales for ready-to-drink beverages or “alcopops” dropped 1 per cent in the first half of 2012/2013.

The ready-to-drink alcoholic beverage segment has been largely affected by a 70 per cent tax increase implemented in 2009 by the Australian government.

Diageo Australia managing director Tim Salt said that the company would concentrate on developing ready-to-drink offerings that the consumer “wants to buy,” as opposed to price discounting.

“Short-term price discounting might give you a short-term kicker but that’s not the game we are going to play,” Mr Salt said.

Diageo’s original ready-to-drink alternatives, Smirnoff Vodka pre-mixed beverage casks, had also suffered of late due to price competition from similar products on the market.

Mr Salt said that Diageo was trying to change the way people perceive ready-to-drink beverages, and that hoped some new products the company is working on would help boost the RTD market.

Meanwhile, Diageo Australia’s overall net sales increased by 2 per cent as the beverage giant chose to focus on its spirits market. Diageo Australia’s spirit segment increased 3 per cent, with the biggest gains in scotch.

Globally, Diageo achieved five per cent organic net sales growth with one per cent organic volume growth. Diageo achieved 9 per cent organic operating profit growth overall.

Diageo is a global company that is well-known for its Johnnie Walker, Smirnoff, Bundaberg Rum, Captain Morgan, Tanqueray and Jose Cuervo brands in Australia.

Meanwhile, Australian Food News has recently noted a trend towards increased sales of alcoholic cider.  Alcoholic cider does not attract the same tax regime as ready-to-drink alcohol beverages.

Diageo has experienced a slump in sales in the Australian RTD beverage segment.