Tusker, Harp, Red Strip star as Guinness struggles

Diageo is headlining a bullish performance for its beer business in its latest figures, with lager brands overcoming a lacklustre performance by Guinness in Ireland and Great Britain.

This week the global spirits and beer group reported three per cent volume growth and a five per cent gain in net sales for its beer brands, over the 12 months ending June 2010.

“We posted growth of five per cent and this was pretty even between the first half and the second half,” said Diageo chief executive Paul Walsh. “If you compare that growth level with other players in the industry it was top of class.”

The best performances came from beer brands such as Harp in Nigeria and Tusker in East Africa. In contrast Guinness, which accounts for roughly half of all Diageo’s beer sales, reported in three per cent drop in worldwide volume for the FY.

“It was the growth in our lager brands in Africa which led our five per cent net growth in sales in beer,” confirmed Walsh.

Although Guinness grew share in declining markets in Ireland and Great Britain, with the stout claiming a record eight per cent of all on-trade volume in the latter market, overall volume in the European region dropped four per cent and net sales declined two per cent. In Ireland Guinness has posted market share gains for 30 consecutive months, yet the brands net sales declined by five per cent.

In Guinness’ other key region, Africa, net sales were flat. In Nigeria the stout’s net sales declined by one per cent as consumers traded down to lower priced beers. A beneficiary was Harp, which benefitted as well from increased distribution and marketing activity.

In East Africa, comprising Uganda, Tanzania and Uganda, higher margin Guinness benefitted from strengthening economies in the second half of the year and grew net sales 21%. Tusker lager grew net sales 26%.

Ghana proved problematic with beer production hampered by water shortages and power outages, as well as tax increases. Nevertheless net sales grew by 1%, a performance matched in Cameroon where growth of non-alcoholic Malta Guinness and the introduction of Pilsner lager paced beer sales. Both markets benefitted from increased marketing spend.

In the United States Guinness grew market share, albeit by 0.1%, driven by Guinness Draft in a Can, Guinness Extra Stout and kegged Guinness. The introduction of Red Stripe drove sales of the brand upwards by three per cent.

“The future for Guinness is more than Ireland, and we will continue to develop the brand and continue to develop the markets, so we will continue to see Guinness grow,” said Walsh.

“Even in the UK and Ireland, where we see a difficult beer market, we are gaining share. So we’re very encouraged with what is going on with the brand and I think the opportunity is immense.”