Spirits Giant Diageo Sees 10% Gains in Rebounding China Economy

by David Kiley (RSS feed)
Sep 24th 2010 at 8:02PM

While sales of spirits are limping along in North America and Europe, the economic comeback in Asia, especially China, will fuel growth of about 10% for drinks giant Diageo in the next year, according to company officials. That's a big change from the 1% growth rate in the year ending June 2010.

The London-based drinks company, which owns brands such as Johnnie Walker, Guinness and Tanqueray, makes 10.4% of its group sales in its Asia Pacific region and earns just 6.4% of group profits there, but it is reinvesting heavily for growth, especially in China.

Chinese sales alone grew over 10% in the first six months of 2010 and the company expects the same in the year ending in June 2011.

Twenty-million new Chinese consumers reach legal drinking age in China each year, fueling growth for entry-level Western brands, as well as locally produced white spirits. But the rising middle class in China is also fueling demand for branded blended whiskies like Walker, as well as single-malts.

Johnnie Walker is the number-two scotch in China after Pernod Ricard's Chivas Regal, while it expects its recently introduced Canadian Whisky Windsor brand to be No 4 this year just behind Pernod's Ballantine's.

Tags: Ballantines whisky, Chinese consumers, Chivas Regal, diageo, johnnie walker, whisky, Windsor Whisky