Diageo’s president of global supply chain said “thank you” to the company’s workers as the drinks giant raised a glass to a pre-pandemic level of sales growth.
Ewan Andrew, who started his career at the firm’s bottling plant in Leven, Fife over 24 years ago, said he thought employees will be “very proud of the results” achieved by Diageo, which reported a strong performance in the year to the end of June despite facing effects of the pandemic and unfavourable foreign exchange movements on its sales and operations around the globe.
Last month, workers at Diageo’s distilleries and bottling plants in Scotland voted to accept a three-year pay deal following ballots of GMB Scotland and Unite Scotland union members at the company. Between them, it is thought the two unions’ membership accounts for nearly half of Diageo’s Scottish workforce of 3,000.
Diageo owns 28 distilleries and two bottling plants in Scotland, producing whiskies including world bestseller Johnnie Walker, Bells, and J&B, as well as single malts such as Talisker, Cardhu, and The Singleton – the firm’s best selling malt.
It also distills Gordons and Tanqueray gin the Cameronbridge Distillery in Fife.
Scotch sales smooth
However it’s the Scotch whisky which made up 23% of Diageo’s net sales and grew 15% in the year, with growth particularly driven by sales in the US and China.
Sales of Scotch single malts grew 11%, driven by Asia Pacific and Europe and Turkey. The rise in sales came despite being affected by punitive tariffs in North America, which were suspended last month by the Biden administration.
The firm, which also makes Smirnoff vodka and Don Julio premium tequila, said it had faced significant disruption over the year due to the pandemic with bars closing for large periods across many regions.
It warned that it still expects “near-term volatility” in some markets but it is still broadly positive about the recovery of the sector.
Diageo is nearing the completion of a £185million investment in distillery visitor facilities in Scotland, including in Edinburgh. Mr Andrew said Diageo would me making an announcement about the opening in coming weeks of Johnnie Walker Princes Street, based in a former House of Fraser store, “imminently”.
In recent months, distillery visitor centres have opened including at Clynelish near Brora following a £35million restoration project, which has seen the “exclusive” historic distillery start producing spirit again for the first time in around 40 years.
Having opened its doors in April and ideally located at either the start or the end of the highly popular North Coast 500 tourist route, the visitor centre is operating “at capacity” for safe visitor numbers, Mr Andrew said, adding. “There’s plenty more people who want to visit.”
Cardhu Distillery in Speyside has also opened a new visitor experience after undergoing a multimillion-pound revamp. Meanwhile, the refurbishment of the Caol Ila visitor centre on Islay has been delayed until next year after the company postponed construction work during the pandemic. Mr Andrew said he now expects this to be open next summer.
I think they will be excited about today’s results and in many ways be thankful in what will come to them in profit share and through the dividend payments.”
Ewan Andrew, president, global supply chain & procurement, Diageo
When asked what he might say to the company’s workforce, Mr Andrew said: “The first thing I’d say is thank you.
“Our teams have shown an amazing sense of creativity and resilience to be able to work over a long period of time in a very different way.
“I’m sure today our employees will be very proud of the results.
“We had a very good set of discussions this year with our employees and with their representatives at the unions. That was a very quick set of conversations to agree a three year deal which employees were very happy to accept. I think it represents a stable future for them around what they can expect with regards to income.
“But also, they are just such a great workforce. Whatever challenges are thrown at all of us, we have a great team spirit, the values of the companies come through in how they do their roles and jobs.
“I think they will be excited about today’s results and in many ways be thankful in what will come to them in profit share and through the dividend payments – they are all shareholders.”
The company said net sales rose by 16% to £12.7 billion for the year to June, surpassing analyst expectations. Pre-tax profits rose 81% to £3,7bn. Shares in the firm edged up to a five-year high of 3,450p, closing o.77% higher.
Keir Greenaway, GMB Scotland organiser, said: “By working throughout the pandemic, the hard-work and resilience of Diageo’s workforce in Scotland have helped build these strong results that keep the profits rolling in.
“It’s very clear that Scotland is central to Diageo’s success and that means it’s perfect time to reinvest back into its Scottish manufacturing base.
“So rather than funnel the bulk of the profits into CEO pay and shareholders pockets, this is a golden opportunity for Diageo to future-proof jobs, production and innovation here in Scotland.”