By Scott Wright

SCOTCH whisky giant Diageo has underlined its ongoing recovery from the pandemic by upgrading growth forecasts for the near and medium term, sending shares to a record high.

The chief executive of the Johnnie Walker distiller, Ivan Menezes, declared yesterday that the company’s “growth trajectory has accelerated” after reporting last month that it had made a strong start to its new financial year.

In a statement issued as the company hosted a capital markets day in London, Mr Menezes highlighted Diageo’s strength “across geographies, categories and price tiers” while highlighting its confidence in growing its share of the total beverage alcohol market to six per cent by 2030. It share of the TBA market was 4% in 2020.

Diageo underlined its confidence in the outlook by declaring that it now expects to “accelerate” its organic net sales growth to a range between 5% and 7% between its 2023 and 2025 financial years. This marks an upgrade from 4% to 6% between 2017 and 2019.

Diageo, which recently launched its flagship Johnnie Walker Experience in Edinburgh, said it now expects organic operating profit to “grow sustainably” in the region of 6% to 9% between its 2023 and 2025 financial years. In the nearer term, it expects sales to grow by “at least 16%” in the first half of its current year, though warned it will be “lapping a tougher comparator” with last year.

Mr Menezes said: “In fiscal 21, despite the challenges created by Covid-19, we delivered strong organic net sales growth, drove an improvement in organic operating margin and delivered strong cash flows, while continuing to invest in long-term sustainable growth.

“We believe our sales growth trajectory has accelerated, underpinned by the strength of our advantaged position across geographies, categories and price tiers.

“TBA is a large, growing and attractive sector of which Diageo currently has a 4% value share. With continued investment in marketing, digital capabilities and our people, we have significant headroom for growth. This gives us the confidence that we can grow Diageo’s value share of TBA from 4% in 2020, to 6% by 2030.”

The update came shortly after the drinks giant declared last month that it had made a positive start to its 2022 financial year amid a strong performance in North America and markets in Europe recovering ahead of expectations.

Diageo emphasised again yesterday that sales in the off-trade are showing “resilience” even though bars, hotels and restaurants have reopened following the easing of lockdown. On-trade sales were recovering, it added. “This is benefitting organic operating margin, despite rising inflationary pressures, which are partly due to supply chain constraints,” said chief financial officer Lavanya Chandrashekar yesterday.

“We expect organic net sales growth of at least 16% in the first half of fiscal 22 and organic operating profit growth ahead of organic net sales growth. We expect the strong growth momentum in the first half of fiscal 22 to continue through the remainder of the fiscal year. However, in the second half of fiscal 22 we will be lapping a tougher comparator.”

In October, Diageo said the travel retail sector remained disrupted. The company saw profits by 7% to £3.74bn in its most recent financial year.

Last night, shares closed up 84.78p at an all-time high of 3,901.78p.

Last month, rival Pernod Ricard highlighted the reopening of the on-trade and strong shipments ahead of Christmas as it reported a “very dynamic start” to its financial year. But it warned growth would “moderate” during the remainder of the year.

Pernod, owner of Chivas Brothers, reported organic sales growth of 20% to €2.72bn for the first quarter.

Speaking to The Herald this month, Chivas chief Jean-Etienne Gourgues warned that supply chain difficulties were leading to missed opportunities in key markets.

He said: “It’s a bit of an issue because it is much longer to be able to ship to Spain than what it used to be. We used to have a two-to-three day average lead time, now we have 15 days.”