Diageo global marketing spend increase helps it reach profit of £3.6bn
Diageo increased its marketing spend to £1.8bn during the most recent financial year, which helped it reach net sales of £12.1bn and achieve an operating profit of £3.6bn according to the company's end-of-year figures.
Diageo portfolio
Reporting to 30 June 2017, the global alcohol brand distributor which owns the likes of Smirnoff, Guinness, Captain Morgan and Johnny Walker among its stable, increased its marketing spend by over £230m during the 12-month period from £1.5bn the previous year.
As a result both net sales and operating profit increased by 15% and 25% respectively, changes partially driven by what the business has called a "favourable exchange" in currency rates.
Johnny Walker saw an increase in reported net sales of 18%, Smirnoff by 13%, Guinness of 8% and Bailey’s of 18% among the numerous brand increases recorded.
Ivan Menezes, chief executive of Diageo explained that the “disciplined execution” of its six priorities helped deliver the performance, and cited progress in the US spirits, scotch and India sectors as areas he was more pleased with.
“Our productivity work is delivering ahead of expectations allowing us to reinvest in our brands, drive margin improvement and generate consistent strong cash flow. Through productivity we have embedded an everyday efficiency mind set in the business and with improved data and insight we are making faster, smarter decisions on investment choices,” he added, before revealing that he planned to raise the company’s productivity goal to £700m, of which two thirds would be reinvested within the business.
The news follows on from reports that Diageo is building a Centre for Digital Excellence which will seek to make sure its roster of global brands appeals to a fresh generation of drinkers.
Despite the growth in marketing spend, it was revealed by The Drum last month that the company’s new programmatic boss, Gawain Owen had left the business after just six months while Jerry Daykin joined from Carat as its first head of digital media partnerships.