Downturn hits Diageo's wine sales

Decanter,wine,Diageo,Blossom Hill,Chalone News Wine News
  • Thursday 27 August 2009

Premium wine sales have been badly hit as customers rein in their spending, the world’s largest drinks company reported today.

Diageo, which owns wine brands including Barton & Guestier, Piat d’Or and Blossom Hill, announced wine sales fell 5% while its spirits arm reported postive growth.

The weakness of higher priced wines in the US was the biggest contributor to the 5% overall decline in the wine category, it said.

Wines above $25 have been hardest hit as consumers trade down with Napa winery Chalone suffering. In response to reduced consumer spending, Diageo has launched new products under $10.

In Europe, total wine sales increased slightly driven by strong UK sales of Californian brand Blossom Hill.

Paul Walsh CEO Diageo, admitted the wine category had been 'weaker' than spirits in the current economic climate and was realistic about the coming year.

'While the global economy appears to be stabilising, there is still uncertainty as to the sustainability and pace of any recovery and 2010 will be challenging,’ he said.

The company posted a 7% rise in annual profits thanks to favourable currency exchange rates and cost cutting measures despite tough trading conditions.

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