Diageo beat annual sales forecasts on Thursday as more people drank expensive spirits and bars reopened after pandemic lockdowns the previous year.
The world's largest spirits maker, which makes Tanqueray gin, Captain Morgan's rum and Ketel One vodka, said net sales jumped 21.4% to £15.5 billion ($18.9 billion) in the year to 30 June, beating analyst forecasts for a 16.1% rise.
Drinkers Trading Up
Diageo has benefited since the start of the pandemic from drinkers trading up to more expensive types of alcohol, investing along the way in its premium brands such as Bulleit Bourbon and Don Julio tequila.
"Consumers are choosing to drink better, and that's leading to the premiumisation of the category," Lavanya Chandrashekar, head of finance, Diageo, said.
The company said its high-end brands contributed 57% of reported net sales.
Its shares were up 0.9% in early trading.
Note Of Caution
For the new financial year, though, Diageo sounded a note of caution.
"Looking ahead to fiscal '23, we expect the operating environment to be challenging, with ongoing volatility related to COVID-19, significant cost inflation, a potential weakening of consumer spending power and global geopolitical and macroeconomic uncertainty," Ivan Menezes, chief executive, said.
Diageo said it was able to raise prices to 'more than offset' its cost inflation of roughly 7-8% since the start of the Russia's invasion of Ukraine.
That cost inflation is not expected to abate this financial year, Diageo said.
Read More: Diageo Posts 16% Rise In First-Half Sales
News by Reuters edited by Donna Ahern, Checkout. For more Drinks stories click here. Click subscribe to sign up for the Checkout print edition.