Diageo has refused to confirm if allocation limits remain in place for Guinness, following a period of “exceptional” demand that has left drinkers fearful supplies of the stout could dry up.
Speaking after the London drinks giant reported interim results for the six months ended 31 December, Diageo CEO Debra Crew revealed the company was producing more Guinness than at any time during the brand’s 275-year history.
Demand in October and November had even exceeded peaks previously seen during St Patrick’s Day celebrations, Crew said. Asked to explain why Diageo failed to anticipate shortages could follow, she said: “It really was just unprecedented in demand and at quite a different time of year.”
Diageo was “working round the clock to replenish stock levels,” and ensure supplies were available for rugby’s Six Nations Championship, Crew insisted.
However, asked if this would mean the removal of allocation limits put in place before Christmas, A Diageo spokeswoman would only clarify the supplier was “managing it on a customer-by-customer basis”.
“We have a strong plan in place to supply our customers and consumers, not only for February and March, but also as we move into the summer,” the spokeswoman added.
Allocation limits not uncommon
It is not uncommon for allocation limits to be placed on Guinness during peak trading periods such as the Six Nations Championship and St Patrick’s Day, The Grocer understands.
However, availability of Guinness in the major mults remains largely unaffected, Assosia data shows.
The stout has bucked declines in the wider beer category over the past six months covered by Diageo’s latest results. Between 1 July and 28 December, Guinness Draught grew value by 21.3% on volumes up 20.5% [NIQ]. Over the same period overall beer sales fell 1.5% on volumes down 1.3%.
This momentum accelerated in the run-up to Christmas, when Guinness Draught grew value by 23.6% on volumes up 23% [NIQ 4 w/e 28 December 2024].
At a global level, Guinness had now seen 14 consecutive quarters of double-digit growth, Diageo said.
Crew reaffirmed the group’s position that the brand was not for sale, despite recent media speculation. “We are not selling Guinness,” she said.
Diageo removes sales guidance
In the six months ended 31 December, Diageo saw sales edged up 0.6% on an organic basis, to $10.9bn (£8.8bn). In Great Britain, sales climbed 2% as growth from Guinness was offset by a 6% decline in spirits sales.
The Johnnie Walker brand owner has removed its medium-term guidance of annual sales growth of 5%-7%, citing “current macroeconomic and geopolitical uncertainty” in key markets.
Plans by US president Donald Trump to introduce tariffs on products imported from Canada and Mexico posed a threat to Diageo’s growth prospects in North America, Crew admitted. Some 45% of its net sales in the US come from products that must be made in the two countries, given geographic origin requirements.
Should tariffs be implemented, Diageo would face a a $200m hit to gross organic profits between March and the end of June, CFO Nik Jhangiani revealed.
It could, however, mitigate around 40% of this impact internally through inventory management, supply chain optimisation and reallocation of investment before taking any subsequent pricing action, he added.
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