Diageo PLC (LSE:DGE) reported a 21.4% jump in net sales in the year to 30 June 2022, as consumers continued to consume more expensive spirits despite price increases.
With sales at £15.5bn, the Johnnie Walker whiskey maker surpassed analysts' expectations of a 16.1% rise, posting double-digit growth across all regions. Reported operating profits came in at £4.4bn, a rise of 18.2% on the previous year, mainly driven by organic operating profit growth of 26.2%.
The world's largest spirits maker said price increases and supply productivity savings more than offset the impact of cost inflation.
As people have traded up to more expensive alcohol types since the beginning of the pandemic, Diageo has invested in its high-end drinks portfolio.
The company clocked a strong performance in its super-premium-plus brands, with high-end brands contributing 57% of reported net sales and driving 71% of organic net sales growth.
A rise in raw material and shipping costs forced the company to raise prices on drinks such as Scotch and tequila.
In Great Britain, net sales grew 20%, thanks to strong on-trade recovery and resilient consumer demand. While vodka, rum, Baileys, and Scotch grew 12%, gin declined, said the company, adding on-trade recovery and innovation contributed to 52% growth for Guinness.
Ivan Menezes, Diageo's chief executive, said he is confident of achieving "medium-term guidance" of 5% to 7% organic net sales growth and 6% to 9% organic operating profit growth from 2023 to 2025.
However, he sounded a note of caution of the challenges facing the group in the year ahead.
"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," Menezes said.
Shareholders will receive a 46.82p final dividend, an increase of 5% on the prior year.
Shares of the company were 0.61% higher at 3,789.00p midmorning.