Major Fife employer Diageo reported “robust demand” of its spirits worldwide ahead of today’s annual general meeting.
The company, which counts Johnnie Walker, Smirnoff and Guinness among its brands, said strong sales in the US drove a “good start” to the current financial year.
Chief executive Ivan Menezes said the company has also benefited from the gradual reopening of pubs and bars in most markets, with the pace of its recovery in different regions being driven by the easing of restrictions.
“The pace of recovery from the Covid-19 pandemic and easing of government restrictions varies by market,” he said.
“Our US business is performing strongly and ahead of our expectations, reflecting resilient consumer demand and the spirits category continuing to gain share within the total beverage alcohol market.
“Increased retailer confidence is resulting in some re-stocking in the off-trade channel. The on-trade channel is now open in all states, with some capacity restrictions.
“In Europe, off-trade demand remains robust and the on-trade channel has largely re-opened with the easing of lockdown measures in most countries, although the risk of additional restrictions remains where infection rates are worsening.
“In China, the on-trade channel continues to recover, although larger banqueting occasions are returning more slowly.”
However, the chief executive warned that he anticipated the recovery of markets in Africa, India and Latin America and the Caribbean to be “more gradual”.
He also said travel retail continues to be “severely” impacted by the pandemic, with travel restrictions hammering passenger numbers.
The company – whose Fife operations include a packaging plant at Banbeath, the Cameronbridge Distillery at Windygates and warehouses at Cluny – said it would look tools to make smart investments in innovation and marketing and seek new market opportunities.
Mr Menezes added: “Our outlook for the first half of fiscal 21 has improved since the year-end, reflecting the good start to the year, particularly for our US business.
“We continue to expect sequential improvement in organic net sales and operating profit compared to the second half of fiscal 20.
“Compared to the first half of fiscal 20, we still expect lower organic net sales and margin dilution.
“I am pleased with the resilient performance of our business in the current challenging operating environment and encouraged by our progress.
“While the pace of recovery is uncertain, I am confident in our strategy, the long-term fundamentals of our business and Diageo’s ability to emerge stronger.”
Operating profits plunged 47.1% to £2.1 billion as sales fell nearly 9% to £11.8bn for the year ending June 30 2020.
The company also came under criticism by union Unite who accused the drinks giant of withholding shares from its workforces across Scotland but Diageo said the threshold for the employee shares had not been met.