Diageo (DEO) 27 Jan 222022 Q2 Earnings call transcript

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Participants

Ivan Menezes	CEO
Lavanya Chandrashekar	CFO
Pinar Ergun	Morgan Stanley
Sanjeet Aujla	Credit Suisse
Simon Hales	Citigroup
Mitch Collett	Deutsche Bank
Celine Pannuti	JPMorgan
Olivier Nicolai	Goldman Sachs
Andrea Pistacchi	Bank of America Merrill Lynch
Edward Mundy	Jefferies
Trevor Stirling	Bernstein
Nik Oliver	UBS
Jeffrey Stent	BNP Paribas
Chris Pitcher	Redburn

Call transcript

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Operator

Good morning and welcome to Diageo's 2022 Interim Results Q&A call.

Your call today will be hosted by Ivan, Diageo's CEO and Lavanya, Diageo's CFO. This conference is being recorded. [Operator Instructions].

We are now ready to start the call. ahead. go please Ivan,

Ivan Menezes

webcast thank fiscal 'XX. net joining building demonstrates a chain I press strong the fiscal our read And with in were the very categories exceeded Growth call recovery results momentum it tequila in up XX%. Organic our of five chance interim world-class builds culture. with for our delivered double supply our for presentation watch and and based and XX% All and up 'XX. agile fiscal hope half growth release, and regions particularly diageo.com. up pleased The you XX%. everyone. brand I'm our net pleased the and of for first results excellence continued to across on 'XX, beer Hello, 'XX sales was you've was our in the had on up broad fiscal first strong outperformance XX%. I scotch digit growth in sales half in

also up cost increasing from XXX in ahead achieve basis operating and And this chain higher disruption supply delivered inflation constraints. margin while of we ongoing while marketing spend managing our improvement global points, a We sales net growth. significant

to also advantage we innovation gain Our execution our share in share with the gain recover. excellent or off-trade And and marketing in enabled as commercial combined portfolio effective successful hold to of continued it us the markets. on-trade majority

to accelerating in for goals interim for of investing our the long-term production shareholders digital XXXX returns and capital return and by of completion are We consistent society including timeline X% program our dividend and delivering XXXX. capacity, capabilities growth we're our increasing

growth resilience optimistic our in term, the I'm prospects for off-trade and we further positioned Diageo. are continued the for in the expect in on-trade. about volatility we believe We for and recovery While well industry near the

our am in premium benefiting for through trends gains to well is total differentiated premiumization and And positioned from bear. for and strategy hand of strongly are in our the share brand Lavanya Head line to its key the open phone your the execute within confident Royal spirits I to beverage our of our category, I'll London fiscal I expect ability call. and alcohol. Guinness rapid the continue growth questions. this We as the beyond. operator in call the both Office and we Park now remainder to back 'XX take

Operator

[Operator from ahead. Instructions] Please We now from go Pinar Morgan first question will take Stanley. our Ergun

Pinar Ergun

I Hi, good questions, two morning. have please.

can any in spirits that have a in do consumers might supply is, with continue America? context, the The on first of And North what the And especially impact do limited the I cost see you volumes, less Diageo as constraints chain you possibility spend improvement to that one prices in one And extent impacted guess second is up? supply goes see any signs volumes? raise to on situation? living premium you. Thank of

Ivan Menezes

Lavanya Pinar. on question and first Hi, take constraints. to on ask address trends the I'll premiumization second supply your

very long and sustained really been and US of through would parts in trend trends, dated and been cycles, have drinking has People other as economic that lots say world. you in premiumization So steady, of I has better, know, cycles a the the the disruptions.

buy The spend household. average spirits. the you home. purchase $X point the a household on spirits They is US if American second make market, half I'd at the at about about look is, day This that spends,

typically infrequent crunch, bottles six, purchase. times when you're a of product they buy People our a faced an with So year, is few an buy spirits seven economic a category.

a you're a buying vodka. premium dollars, year, Ketel price to a few only you're if it's drinking of a low you're So and vodka, bottles if One few

sustainability the actually, And believe so we do good. is

at premium adults, spirits, look And The and demographics, buying buying America XX, other indexes multicultural in over XX trends the thing to again premium the for premiumization very over young the I spirits. spirits. XX, in population is see you you would if positive index also demographic say these

immune within overall So, mean, growing But tailwind power. faster. not and consumer Diageo. we for confidence brands we're shifts, see would I those And price continue spending should from I higher that still say

Lavanya Chandrasekhar

business said I’ll and our North of top constraints are are take that, in On business back your X% volume X% in But America COVID the Yes, question by supply growth in end. that one, volumes at America. grew we look was the North this first half impacting issues Pinar. part of seeing in business impacting X% kind America. between at North U.S. having somewhere volume on pre levels, our

issues spotty, historically there volume the job so, able I seeing have is fantastic doing having them we on business. and are navigating organization grown said think being grow of faster we that, but And yes, than the to a

strategic Bulleit those brand resolve impacting And supplier bottles. just specific one areas liquid of talk on certain true we're really true constraints very terms little fall me Bulleit have parts we aged And bottle to that’s about very that's Let seeing we're constraints. we're portfolio, on Crown is the seeing of liquid. issues. where is And That's a through, the which bespoke tequila a our on then on issue constraints. in and on Two Royal bit that glass. working with is around our

Pinar Ergun

Great, thank you.

Operator

to from take next going ahead. We're Credit go from question Suisse. our Aujla Please Sanjeet

Sanjeet Aujla

think you secondly, Couple to from magnitude give be sort dynamics outlook, And constraints Europe, in up of to chain Morning, HX? you again, of please, timeframe particularly seen China, the be in then my we've as through lot us already, emerging about take Can a I'd particularly lockdowns position me, expect think us Year can think to you in about if on against on moderating into Chinese the feel you. you're Or Year for Lavanya. current then we've of sense markets Thank you you you in you just supply come heightened seen questions And give certainly question to can New in a pricing through those but I us the there's Europe. how in of Chinese what recent final the region? bit sellout what the any New pricing seen North resolved? a following color on or America. in give be a we've in interested as and when weeks? Ivan trends that a of

Ivan Menezes

X particular, parts large-scale into On you I COVID have say China do Europe, see whiskey of we Baidu going the We're does momentum. be about see gaining and term, in various certainly Chinese the continues and a on and that don't mean Lavanya we Baidu. market on Year, we Scotch but gifting significant we've confident in exuberant. gained in at to feel you positive bit supply both good China, Yes. our impact environment But out pricing cover is about and growth there. if I'd strongly. continued large-scale investing Baidu of for performing gaining feeling the momentum chain. China solid. Why it's growth strong And say good Actually, look business. gaining in lockdowns is I'd country the spirits the business, very Europe, impact you On share. the And I share. banqueting I numbers we've markets, And our less, take our mean, to feeling both in in we're are -- is doing been share in of the in We're we're what say business not New very longer occasions remain of less. and been China. we've going we're be behind pricing X for well. very prospects And brand Scotch I'd going the whisky to solid, ask

positive, talked taking we've inflationary the price. and there's in helps multiple manage Europe. good growth got growth Mix before, we've As we very be will Volume volume impacts. some us, to and levers is

combination Europe of more the surgical productivity you see pricing and we're -- very will inflationary So into in but apply price coming will offset pricing pressures. inflation, we the but of increases because our how and

Lavanya Chandrasekhar

supply on North I'll in constraints America. your Sanjeet, Yes, take question

to this new market, our organization suppliers capacity been to mean, America taken we fantastic to that delivering to organization us the proactive have our suppliers, strategic has And the able really, key volume very said at has in bring well. allowed by example, the and North as North of of in results strong overall glass area. growth because increase relationships almost I look to performance the achieved we I absolutely we been approach XX%. as able America, the in As that in has context been of to And in of the has which the Pinar, to mentioned have with this got this business, an because procurement

of be It's going able are teams the it's think we to months before it, specifically, be -- by we not to be working Bulleit issue matter think it. going resolve and on Now any long-term means. actively a on a to to

On number constraints we take help work to around have, our look, tools we the a aged that. us of have that liquid arsenal that in

at to and our constraints. on scotch where of A&P thing America performed The have the North double-digit we spend -- North as on are Walker part we portfolio an similar move not America look the strong do our example first is we shipping, Kind demand able to in in scotch Johnnie results where have growth category.

the combination a constrained growth in management as are situations. well demand we be as pricing able so of these shaping, areas tackle And able and on through the revenue these constraints to to,

Sanjeet Aujla

thank Great, you.

Operator

our will go ahead. Hales now next Citi. Please take Simon We from question from

Simon Hales

as Ivan. you've for competitors those you. matching U.S. comments? making Are that follow-up price Europe? Thank morning me really question. Morning, my on please. I Lavanya, That's the Three in the first and Can or following well, move you pricing been just seeing

your year, should a trends the of bit this the Bulleit business the pressure. there have point brand a in of your and beyond to Tequila, the how half But while in and some cetera, the should CapEx will showing bit us that evolve those up very U.S., think how volume some strong on of the ends et specific I then CapEx. mixed more sort brands performances view. struggling portfolio, you CapEx the Bulleit how CapEx appreciate first given XXXX? in admittedly premium the we you but from color growth, and, quick Smirnoff of little some supply just more and and Can finally, weighting expectation. Clearly, about think about of well. half? Secondly give of mainstream catch-up sales Captain a done there bit, more a in was more of And we constraints look second Morgan, little perhaps some like they're importantly, the Clearly, Baileys really under scotch, on momentum drivers

Ivan Menezes

Okay.

capabilities, management we two I pricing, the have say the and good. do Simon, very really I'd So we embedded now is can growth data CapEx. cover the -- and first Lavanya analytics revenue

As up. I the earlier, price we're measured momentum take about looking is our the going equity confident we're share sustain And talked we to increases at. about market and reasonably behind investing brand. Brand ability feel

the in pressures. right everyone You for high across have because dynamics spectrum of different understanding now. And are they're our but different the the is inflationary customers competitive facing buying also pressures are world, everything say right inflationary it's parts clear I'd more

we momentum we're and kind very able keep make levels pricing of want and believe will applied, our we to sure the and of said, disciplined do in is as investment I So the I equity more as and and we high. brands brands -- sustain to really consumers surgically growth and recruiting be to

would just brands, depletion. the some issues bounce-back and we the COVID seeing through on of supply shipments On chain little versus are, I of as in portfolio you're the there the say, some come U.S. differences

mentioned. answer On just momentum depletion you our actually, your on the Captain directly question I'll three is So positive. Morgan, brands

in X single months, it's months, So momentum you market months, improving. XX as growth. digits, at losing but share, we've look where you it's been if look low at it's share And X

So NFL, We've and be big stabilize with and excited in Captain about a which right should now. we're the we're got better. program season

Smirnoff. talking improvement got depletions I'm the and And about coming marketing there. Smirnoff is So you again, flat. see should we've innovation U.S. good behind some

you're American will growth in to growth, stable the there brands to happened as we just growth that Baileys And them the Baileys seeing Baileys. and the high big the single-digit two be positive, is be some of just tariffs need actually happening. below at depletion is these we do we're things positive So rates, what in North but lapping and But of that on see and effect those again, coming off and on months. very X U.S. it's looked all last the shipments we slight type

Lavanya Chandrasekhar

fiscal in your question second I'll of 'XX. weighting Simon, up part on of the the take CapEx

on have billion GBP 'XX. and catch-up previous our comes and in CapEx between hold in guided we than continue expect allocation This is and guidance business. need to -- perspective, strategy unchanged. really that online projects We to we the of or capital were remains fact will back X COVID million due higher in put paused fiscal to our the -- now the spend to and From to GBP coming invest a of strategy from XXX

Our growth the business, continue we're seeing ambition business invest as to business in capacity on and growth ensuring and as we CapEx perspective, #X includes focus will to spend. to the From investment be have critically capital trajectory a today meet the the of the this important. that well that is sufficient

Street support Princes consumers come strong our love back a digital been away real in well. experiences. September, the invest And We remarkable capabilities, to to a for behind boost and Street, the been how that's Johnnie has continue focus Princes that with consumer what in opened part key brand visit and they This terms consumers area is that's -- as Walker unmatchable. also brands. we large We of a when of

marketing to invest chain. building our marketing to our support even business, the growth our behind supply effectiveness commercial terms We effectiveness, as in well in understanding continue of our as of capabilities, as as capabilities well digital improving

that to in area our So to our will business. key remain invest continue -- behind focus

Simon Hales

Thank That’s Brilliant. very you. clear.

Operator

go We our Collett from Mitch next ahead. take will now Deutsche from Bank. question Please

Mitch Collett

I've Lavanya. got Morning questions. Ivan, morning two

half, region, the mentioned? by have was given may X.X secondly, think COGS have at just then what efforts, you half? the from inflation you that but particularly levels at on liter that some end reasonable depletions between you First, you've first you of can in that then you've the say of would I and inventory level shipments kept gap is and the expect appreciate ideally that on given half can per comment benefited statement COGS you brands second comment your up per of year-on-year. I level premiumization in liter on how the COGS you're the COGS perhaps a the productivity for seeing And

Lavanya Chandrashekar

the take Mitch. I questions, Sure. can both of

have level, total relatively second line with at shipments and against ago has costs more about that's shipments our have in North -- I'll various liquid have just half, and several across at our we assume whole some North to seen well on the seeing the But the the higher commodity synergy remind a down we with just product, aged supply our to America, seeing when seeing talking stock to year-on-year, enabled and different we to And also benefits as Where inflation year-end, what other actually how drivers to -- nature parts trade with the many you group had muted have of manage on from we on we the And through margin. stock we're than costs seeing Premiumization perspective. levels, in in-trade buffer do seeing opening of stock timing by see shortages to are percentage terms that cost higher also We're in fiscal we of up of inventory not were our perspective, we're Other year-end on a costs. that the big inflation, X% that and places in-trade that 'XX level the the from because of comes et from to to you a come contributes in a are at inflation. just are our the With able clearly everybody, of of I at inflation the through come natural embedded across just in brands the and logistics had So your growth. differences depletion America, a percentage between been within issues. first total due question in well volume part group a have keep line that and decade perspective, level that really just containers, logistics offset as -- On seeing the COGS are of than America market the you're is stock. seeing have growth said -- depletions. leverage product impact laid what seen essentially the level. of been business and as we ago, of despite brand back -- cost we business a cases. a selling been from level day. are the what last volume within impacting differences we different brands From of inflation, we're chain years both result, -- what into cetera, due We've shipment as all, in procurement We some North we today large significantly and And that, because There a increased at and cost is that have gross flat we our happening what we because of business a on-trade contributed with in productivity we're end inflation. we managing manufacturing we perspective, support every us that's levels of productivity certain gets benefit. to of a depletion. margin has of grew our Diageo.

to us take manage play So us from grow margin, margin the in has manage And growth mean we're looking spend, at it a that -- margins. allows mix smart a board. to back to I our way going enabled trade then across really seeing management out revenue pricing,

Mitch Collett

That’s very Lavanya. Thank helpful. you

Operator

Pannuti from take Please go JPMorgan. now next Celine from question will our ahead. We

Celine Pannuti

Good point -- whether two one, the growth of in you. market. X% Could the morning number everyone. I is the rate then say my you to would volume, to of guess the what be what question, what do ahead said market is Thank and questions, you I And or you slightly XX% has said, circle much market of business looking like which your that is My of the ahead but X% And overall share that how You mean best a your volume, very That impressive. it seem second be understand seems A&P holding U.S.? growth is? of virtuous I was and reinvestment. been this at to be at at may bit increasing your gaining made market about much have U.S. I doesn't look clearly, ahead.

a at of is look an towards benefit level moving do you. observation? What products? cost on it that does So premium oversized that what that the mean? a I is has including in should And total been the price first Thank half? basis mix bit the you it Or the and maybe support think consumer

Ivan Menezes

when with just kind this of year start I this at I'd comps have and COVID Lavanya last all careful. in. what and market look let jump year, growth Yes, to happening you was a can say rates and you bit now be

is, two, now, have little and because X%. faster or grow growing U.S. bit of things normal, return it let pre-COVID, address would you to North the steady-state see is -- what in fiscal, the top XX%. our We marketing because it grow got few priority are we to I a how demographic is me right? as And X%, years. and taste still our not what is to is the the we sustain are it not pressure. estimate U.S. and it the at industry growth at you've in this you quarter underlying long-term years. return terms are outperform months share U.S. lapping. half or our few economics The one at behind I as like business, X%, good high. really margins A mean, a under choices a do from in building smaller of market what targeted, growing now. this the remember, compete first goal But are that or will of sustainable will say that just about will gone deliberate and investments past it's nothing years bigger just you America know, on us TBA U.S. We we A&P had the These year get this will three, that in There the of here very positive. brand of growth very The year So U.S. confidence It's the are returns. as back the the was trends mean has we've the to about that up making U.S., five our I is half really to this X about spend The by invest engine have in -- and brands get past lot we a market We're in to terms performance, four. value margins in number the structurally market. the in value and seen cost very pay investment incredibly changing next believe year

So gives the marketing years confidence the built returns point want a and We're now smartly I on going in reinvestment -- really capabilities time. clear address last and more has on investing us lot over your few that's returns the being the in would Diageo how up in what U.S. very we the very the

Lavanya Chandrashekar

Yes. a build perspective. marketing we Ivan. way really on Celine, at I'll the return look on investment just that, from investment is

lot we return then cast program, marketing about and alone of of investment whether as overall past, catalysts tools volume were the this that which being what as measure we've at growth actually spend individual as In a -- to get end area. Ivan such on financial allows over built look what of said, really talked a expecting. linked we we to is would but forecast capability return the as several the -- time, not that investment. it's benefit perspective we've -- about well we've from in And talked track looking the tools I've and it the on us of on built So like a what's back

high-margin North accretive Our share -- we to business. business a frankly, in the are in us P&L. business we is market allowed very making manner. investments has And of market sustainable this all are the What that to grow group grow American growth to a this of our ahead is

so is it growth it's said, Ivan a as America. to sustainable -- North for our part And deliberate a strategy of within us engine build

Celine Pannuti

Thank you very much.

Operator

We next take Olivier will our go Please from Goldman now question Sachs. from ahead. Nicolai

Olivier Nicolai

Ivan, morning good good morning Lavanya. Hi,

questions, following Just up two quick actually on the U.S.

First into of if all, and release the pricing you you quantify mix we year Would and look was XX%, mentioned press mix to portfolio? taking you mentioned us in much. in per price so an se? far increase plus able the obviously been the idea channel price XXXX, you And U.S. pricing. this that magnitude U.S. the -- of at the give your element you've Thank can of you then very the in premiumization well, be

Lavanya Chandrashekar

what we -- will have. of that don't Sure. surgical tools have in we of pricing down at is of taken break have as year. look that I disclosures. within that the the tequila very -- But overall part a growth revenue management half suite We've Olivier, taken first tools on as pricing we a our the say we our in pricing we

double XX% some well actions business as digit, pricing share able X.X% constrained. on on about We that taken strong pricing continuing growth Crown, very we've been strong And of it business, while to where to We've been Guinness. liquid have grow spirits pricing we execute tequila. growing also taken of tequilas. -- our We've share growing and the taken on some have action as on

of by in based are database strength based we line top the growth actions, have. individual that these we And on brand -- programs the on the so made doing manner margin of equity a marketing again, pricing balancing growth. and are take the our these brand we brand, with as so strength growth decisions And

not to opportunities say the clean as evaluate to of In you the in will that I the that on in answer what terms half I'm this, year, case-by-case parts we of in would give the to going of as we both a should U.S. pricing world. a see but you as on basis, will continue expect second other well pricing enough expect

Olivier Nicolai

much. Thank you very

Operator

from will next Andrea from now ahead. We our Please question go of take Pistacchi Bank America.

Andrea Pistacchi

Good possible. Three, Ivan, that's and morning Yes. Lavanya. if please,

on you said I pricing favorable the than wanted First, time. been a to U.S. environment follow-up clearly, taken where And it pricing. the seems just again you've in pricing more has in long

in So question point really or some possible on been are start away from the can is there brands is, pricing where to building do the really SG&A take of would in SG&A. it I please, hasn't you thinking me, on we pricing the SG&A, organically quite mean, where the strongly, I the our far think, you low regions the And momentum digit. And It on in years to the like markets the this organic one given suggest, last How impact basis expect performance or it got probably seems among feel points up vodka you against Captain as continuing momentum. tougher you've very emerging portfolio was double XX question, please, next the where you'll that brands divergence much pressures months? and with be on like inflationary X, Morgan? about consumer? then do Second strong up comps on

significant give that, this wondering was I in what whether Thank a drove SG&A. on So bit more color increase you you. could

Ivan Menezes

brand. I specifics would I Lavanya say I'm into by get and pricing take the Andrea, the What is going the in two U.S., again, the not to third. first we intend really delivering. are are pricing of embedded the On we and well more management invested to take be and been and capabilities have in, have to on pricing do able revenue than historically. brands The Okay. growth

coming we So our you manage realization business. should through on the better portfolio. see U.S. price And

I out taken as Crown expect vibrant. mix forward. of medium-term the significant we've would Diageo tequila mean, the you and to is emerging that a we will X%, of ago. yes, X% and are across Lavanya total and few just about, it say, risk. at places, grow and very to weeks actually going time, And increases. markets, intact. the look Diageo can right increasing Over volume, laid talked deliver for fundamentals whole so that. In the I balance being a we more All to of price we spirits On I few for Scotch guide the we would growth than our and markets the portfolio faster price bit guidance a The demographics, low penetration emerging ensure

were and came some is in-home in the Most what through recovery You see also emerging much the increase and of numbers strong. in strongly, the And markets I'm our the Scotch, growth we is growth see but opens pleased faster. that. happened in we for Scotch through effect, the of There bounce-back really, penetration really it see Johnnie did deluxe Walker scotch. really about on-trade COVID rates

we're mean positive strong about in momentum I Africa market doing has see is and is Guinness beer the come So feeling you really Latin momentum. emerging back America. there nicely. well. very

business beer solid Africa, XX%. then is XX% Asia, up Johnnie including Scotch, Our Walker very in but did up up really business our well. is performance, had in XX%. And India Smirnoff Guinness in is a which

a the we have good this in do of about, -- where markets volatility, long-term for prospects level the an growth see always Diageo ahead. feel business accretive we but So being good very years emerging

Lavanya Chandrashekar

increased it than I'll on rate. take growth our overhead basis, dollar on Andrea, Yes, our the SG&A has on has slower a overall Yes, increased, far question, although SG&A.

through it seeing on business. of period significant growth the And spend behind by discretionary where way of are through really the which reason spend continued fiscal operating we're start has just on a we to the come significant that first COVID a lapping pulled leverage back 'XX. we the half had the is -- at Our of overhead, in driven

are normal, as started office, all and to in Relations -- So revert said, I the the Ivan again. are have back in office as to things back the and we mean, we team, Ivan back myself, Investor

recovery God. had some travel, We thanks have modest of

about And back we're it's reversal just a getting to just so closer trying -- normal. think to

Andrea Pistacchi

much. very Okay. Thanks

Operator

will our Jefferies. We question Please ahead. next from take Mundy from Edward go now

Edward Mundy

me, Three questions morning Lavanya. please. Ivan, Morning from

then continues Diageo a this there the in presuming engine, half brands and in drinking are is about around a the comment these But for how years question, the previous for As Lavanya, you the and ensure be acceleration growth a that question left the category? around the run comes just partly your year? buyback, don't and execution. that early into of brands, in the comment, X recovery cocktails the of by some the new cycle. stay on-trade bring risk your entrants, plenty strong through? runway I gives you as could brands do consumers there's And that evidence think second about do reasons of through still you on think, lose any more that given other of third And good how What of than your it the and spirits of tequila we're part celebrity-endorsed you your really is momentum? confidence share presentation on-trade, relevant TBA is the and to forward The

Ivan Menezes

two. take I'll first the

UK the take little on-trade a We are I'll spirits momentum the stronger. example. as an seeing in

beer, cider spirits. wine, So across spirits, spirits premium in and has strongest the been recovery

So happened. right, see go with there the -- on-trade the when parts the down-trade And to hasn't coming -- was concern, that as we a world, in on-trade. and they to where back other of back people

still continued U.S. as the spirits appeal as most to see understanding -- The seeing focus you the see markets, It's growth, trends we and the So segments. just growth reopens. over. as tequila not strong. ago. tequila, before on are of gender. a rest age dayparts, drinks. we cut of The positive It nature I'll of occasions when the statement, very used we across in crossed I'd cuts the say the broad so It It is across demographics on-trade and The on margaritas consumer shots a in significant. for across it world, and It it cuts lot years be category's multicultural across the cuts runway. has is many

X very we're bartenders see the going tequila growing build. total faster the menus. is the to but drinks bars we spirits. It's a -- So bigger And very seeing international faster of than we But so around going be see just of It's see world, not taking the that connected, next right small. The rates grow the industry. cocktail now being forever, at growth share years the do to in mixology it. tequila do don't kind tequila spirits growing obviously to we the it XX slow for we community is are is It's I high-end excited way I mean and its onto explode. starting. spirits about at a industry, and than not expect making to

feel the around do we And and investments distilling also part, about making in capacity. is in we're guiding growth for So the trends long-term agave that, total, positive in tequila. Mexico

Lavanya Chandrashekar

just I'll the in to April in completed XXXX. but and in program I'll July of we acceleration remind announced announced maybe by share $X.XX started we And due buyback, passed on $X.X we XXXX, buyback -- to the it January XXXX, COVID, take paused program program when the back that be a billion but we your we years. billion question in we three then May completed the the

to that We the March reason plan buyback because the bottom billion this to to ratio 'XX, ratio of of target simply year. completion by have fiscal of leverage X back our program, the our end accelerating is leverage program GBP announced it's range. the we for complete The

best half money to with debt range a where return of net X.Xx. target And ended to we we line to in shareholders EBITDA. in allocation the capital So X.Xx our We method possible. strategy, at the Xx possible,

of the end we when end had from program we to 'XX the XXXX, what so we date restarted extended was had -- completion May in 'XX. of And originally

fiscal pulled Given our that 'XX. it on to forward we leverage, back are we range at within

Edward Mundy

tequila, I at back The the stay celebrity just now are getting do endorsed of clearly Don that cases. momentum? tequilas lose you don't Casamigos traction. are XXX,XXX both Julio Okay. and other And Ivan, how mean ensure coming some rock brands and to relevant

Ivan Menezes

I outsized we've Casamigos, tequila sorry, share got is address these that These incredibly And would keep two right? Don and are the feel healthy. we've aspiration momentum I'm we Julio keeping say They're so of mean brands doing. Yes, brands incredibly I recruiting. mean trend. key on in share with I gained vibrant category to good. didn't I that. within the

at liquids, on XXXX price may constrained Julio We the And have terrific Altima, on points. a we have and within happening we're higher premiumization as before, some pace. mentioned Don of

really I brands It healthy. business. So a brand would a keeping brands is premium business, say these

So it's business. wine not like the

the of doing game what You keeping brands this good the I keep ability absolutely that, brand have doing playing the and And team of two the brand ensuring a pair strong this tequila. keep is within is from and needs our category. we're Diageo their top at of very on important And to equity momentum feel the role momentum. share in start these very of about market a we to base

Edward Mundy

Thank you.

Operator

Will ahead. now Stirling from go from our Trevor next take question Please Bernstein.

Trevor Stirling

questions Good Ivan. and Three morning side. Lavanya my from

noticed broad-based platform. more BXB regions. that distributors both? but maybe little investing then reasons incredibly one, that. or Ivan, America, looking performance, finally, three primarily two CAGR direct-to-retail wonder over X% about bit then level, Is if ONE well and behind Pacific. have impressive that's that looking little scotch. bit the to strong seems a you incredibly say to behind the So the one underperforms those at relationships of But that, performance, First but where that that you're probably And color as be the region towards which oriented last Asia bit probably talk Latin Is the on Diageo of I could I'd fair? at a is compared about or years, a something you is pretty potential I regional a

Ivan Menezes

Yes.

going So now, The a there's I'll gone The growth, on. three numbers, Pacific COVID disruption Lavanya and can as the first years BXB the two, the cover through we're over that X% at you take platform. has say, business and this is Asia level. few things

growth even have been of a parts this the half Asia I through mean in of we yet. that challenged. bounce-back less had You've more still

you Africa come this half, part mean grew and XX% bit whereas Asia. in about, I it of feel Within So really only America China Pacific, Latin XX%, been Asia see XX%. strongly will grew a and Southeast has really at at good tough Australia Pac Asia we grew back.

And Diageo, CAGR. the that positive remain forward growth than growth. And Southeast mean will be I then accretive we growth. So coming our some is China Korea I growing Japan India about engines very and will Asia, Scotch that low for think faster growth. I is is But average. have low impacts should drags. be be very back nicely, looking positive. Australia lower

be will lower Asia growth. developed So

through -- volumes. mean, we're Deluxe see scotch, the half. I America, percent market Latin and conditions rate. as is really momentum were what Walker share driving we COVID, home that's very is Scotch on question doing just consumption we other recovery, second interesting Tanqueray bigger mean occasions Latin America. think couple And And scotch share, right more very can we we're do the I was just we're opportunity. the a about in I'm our done strong have Mexico, at last in increased us brought is come high-priced percent this years. in And Everywhere Your looking and slightly the up the up and behind. going of positive else, was faster -- of we're volumes with whiskey what for the gaining I to has penetration at feeling activate -- back, in not opened strong than Johnnie XX-plus across the And the TBA improved outlook it's on-trades the scotch. mean the where has market seeing we're the pool way growth, gaining of over share well. I after we're at and XX-plus really up lens

Smirnoff is business good. through is as well. Beam Jim Our coming nicely. is also Baileys performing

America. good Latin feeling about So

Lavanya Chandrashekar

platform. access point your basically engagement Diageo other I it's our us single They're And customer anywhere in any a point able able their from something on six in place device have And to can provide to it a Trevor, our time. allows It They're be able they're enabled any of service more customers, our is enables able do customers. question now digitally customers. in to It's take BXB at to to any point service to we and to us markets, so single Diageo -- with Sure. account. it ONE. a access content. better that

Trevor Stirling

and Lavanya much, very Thank Ivan. you

Operator

Will UBS. ahead. Oliver our next question go take Please now Nik from from

Nik Oliver

my from Two side, please.

where mean, the like downside years I the and of and with share Africa X to this upside on anything variable the the much. now cetera? from Lat RTDs. in back fixed structure, part time the And guess to maybe Am good anything growth out U.S., Is is some terms us surprised market, First cannibalizing to can forward? et in guess, versus there you model these emerging of else, on but markets a very operational in the sourcing better And help in the it going outside Thank you good second one at spirits the you coming bigger leverage has in spirits cost is and and particularly past. I mean, the I the beer, called I us then the spirits from, margins, or very

Ivan Menezes

that mean, we business We so And you going a back. get I would through the economics hit back in the lockdowns, volumes started? mean, really on while a Yes, were cost wasn't lag, I through Africa, we've beer big knew if when significant business, take On I come we they market as as on is the fast as take worried. particularly like I you fixed expansion right? don't a business. the recover downside and so on through So that come why the Nigeria, volumes the But Africa margin we back, business get margins has had drop. correction, the come went

the volatility we at forward, it you've got stayed does to very volatility, is, strongly. what look and those you for I when whisky is of similar at very now we mix businesses, that want this coming you margins. the invested and of the were volume your -- volatility what question, staying impact short-term due had to the in so business swing not when we kind Latin went trying as kind height small, that And factors, the going cycles. dropped, to to a but big they're have when deluxe external your COVID, And true On mean, we that COVID it's through if margin of manage volumes of business, back dynamic deluxe high-margin and Scotch America, --

see in margin markets on you and the both volume and pricing Africa view productivity. premiumization, long by and expansion Latin So take both we America, growth, driven do

way would so forward. And company in what we as right volatility a to not environment. see where external through having knee-jerk getting expansion really place in disruptions reactions the know, quality you margin on it's expect Diageo's we think a But we and focused steady the we're the economics sustainable straight the and short-term I approach growth line. never are in going steering to And is

Lavanya Chandrashekar

your Nik, spirits take I drink. ready question, on to U.S.

very to of say small all, percentage a it's that the right of First business now.

seeing small it's rest liquids of more And choosing really the number where so for number. ready-to-drink we're we're benefit a the it's the I'd thing which offerings. premium really say caters U.S. on market, the drink flavorful for dynamics looking of playing small a are XX% consumers while to consumers, convenience good, growth a in the is the and, that one But on second to out that that more frankly, same thing better. our in They're seeing

fantastic to we're as Crown a have the premium out are category seeing products of willing pay that one can. such consumers dynamics in play to so And Royal is in a cocktails significant the U.S.

really can. in moving Tanqueray people in And Tanqueray, products up a a a so from Royal the in is now in to a the spirits who business better a Crown drivers seeing that's soda can other or or much our one with can or of may that coming have growth of spirits Ketel we're Botanical experience RTD can been drinking to

Nik Oliver

you Thank much. very Great.

Operator

question BNP Paribas. Jeff Stent Please We last head. from take our from now goa will

Jeffrey Stent

if Two morning. may. Good I questions,

one, I Ivan, first a trade bonanza could on needs be India, discussions. think big just said and historically, The you it

And so share of…

Ivan Menezes

a There's a we're background So bit hard having of hearing time noise. you.

Jeffrey Stent

now? hear better you Can me

Ivan Menezes

can't hear Sorry, we you.

Operator

stepped away. have It appears the caller may

will from We question now take Chris last Pitcher Redburn. go from Please our ahead.

Chris Pitcher

of couple A much. for me. very Thanks questions

with think mindful do the expect to travel -- to sense restrictions. obviously, of terms Lat us And Can then And the of the reduction many for track first levels? the But sense striking inventories, in obviously, stepped business the to Retail, markets other us the those you actually Thanks. trading scotch back a half. of Africa in in, an America? Guinness you were do terms make X that be how lastly, on this much CapEx. Travel of there? was expect it strong and and you lower? in outlets travel Could Europe get in then is a trading structurally recovery Latin In you year? you investing back raising that maturing how back to levels, of when give up particularly Or behind mentioned you're in might Am pre-COVID do billion pre-COVID GBP of you you reduced those idea give -- Travel Guinness the pre-COVID Retail of you recovery on But give could

Ivan Menezes

pre-COVID Travel There's about Travel Okay. Guinness take nowhere channels remain a recover. recovery. long way we're Retail. I Retail to I'll ahead Travel the recover back. will that it levels say and Retail, mean, on we confident to would I

You consumer lot is the got traveler. to traveling, a personal remember, our growth of

-- we we The on-trade a just be because how if focus to business that would you relying I closed? we've So -- recovery. to gaining growth will we're significant And not depend it's call, fast so probably very through all many to the much to had at expect it's Guinness, pick it's interest aerospace market hard on do was a bit the look longer, are predict, years, to as airlines little don't drive I as in were, what the question get seeing travel are up, And where going another passenger returning. see on consumer but on that say, in recovery share you two the we industry, back travel outlets I the a travel we maybe mean, much recovery to numbers. but

Chris Pitcher

number of addressable Or... been terms trading terms market with, accounts a outlets the has structural the in of number In there market, in of recovers you're of you've the as reduction got?

Ivan Menezes

of Yes, there -- which well. been level as a there's is shakeout because historically

make even you churn. in. new for have feel I'd global what the the XX% say just fleet. also for and know, through number, outlets out then dollars, generally, drop outlets them. seeing do capital on-trade been financially particularly the of would has the weaker you're outlet expect the through. COVID come this will we back weaker, a it create consumer that of haven't business recover coming unable existing a good to -- shock fleet bit As represented back, will be mean and able change then come of though outlets the we behind to to entry is you new outlets degree or expand though has to the XX%, invest unfortunately, weaker new the But weaker I composition more into and of The that a sector

Europe. actually So brand mean, Guinness we I but recovery as And in fast seeing momentum in improve. also not the just the off-trade. conditions healthy overall, And the good on-trade are is shape is very in in happening

for positive on strongly the future very And and U.S. the Europe, I'm strong in the in of Guinness and some now innovation building is And kicking in it really Africa, it's growing brand in. and was

the very in is So brand shape. good

Lavanya Chandrashekar

an stock, the in at referring part Yes, of stock. end down has of to edge basis. critically to American in in think the increased this for were the future it's I'll investing we ongoing on where And evaluate I way growth on stock example, the us 'XX continuously on think now we fiscal Diageo. our fact for really the to growth eventually of at -- to liquid that the tequila we sustainable our end X.X potential level maturing second the maturing an future the investment at take close is on whisky, is important an portfolio if that question billion. look the now look whisky and of be what Look, across Canadian maturing investment half of And you laying And fiscal of Diageo. be Scotch, your on the at on

Chris Pitcher

ahead? of Guinness that in launch that left, bit short January quote but all that [p] terms I draft dry title can is of pulling X.X the in going? the in a how on know is UK, I

Ivan Menezes

constraints. I beyond got way X.X. we The Guinness we've what production demand expected on mean is

the the next course we hope year, over back into get position of of supply. So to a

far what right we're with supply. outstripping is demand now. that's So dealing The

Chris Pitcher

Thank you.

Ivan Menezes

the and company draw I doing to of Okay. for you to shows and to Well, support catching close. look next of call. virtually you. many everyone, few many Thanks, appreciate joining forward for road your with up forward we'll I the a the days. and look with and will in Lavanya interest be up catching the

Operator

your This Thank participation. concludes for today's call. you

may now disconnect. You

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