It must be a fascinating time to work at Diageo. It’s the drinks giant that needs no introduction. The largest international spirits player by retail value, Diageo’s products are sold in almost 180 countries. According to CEO Debra Crew in a recent presentation, it is 1.4 times the size of its nearest spirits competitor, and bigger than four of its top 10 competitors combined. Diageo is a behemoth. But it’s not immune to market pressures. In its 2024 first half interim results, reported net sales slipped 1.4% to $11.0 billion. Reported operating profit was harder hit, contracting 11.1% to $3.3 billion over the six-month period to 31 December 2023. A poor performance across Latin America and the Caribbean accounted for much of the declines. “The first half of fiscal 24 was challenging for Diageo and our sector, particularly as we lapped strong growth in the prior year and faced an uneven global consumer environment,” Crew said in the accompanying statement.
So when I sit down with Global Travel Managing Director Andrew Cowan, I’m surprised by his genuine buoyancy. Always a cheery character up for a chat, he breezes into the Diageo HQ meeting room asking about my Kanken bag as his daughter is in the market for one. Perhaps it’s the midweek Guinness 0.0s that he tells me he enjoys after work most days. As it turns out he’s got good reason to be upbeat. The Global Travel (or GT) division is well outperforming the rest of the business.
“We’ve done really well,” he tells me, stressing the ambition to outpace the wider company growth. “We’ve enjoyed, probably, an unfair share of the incremental investment that’s been available.” He and the team are winning market share and the business is scaling globally. “Our business at the half was bigger than the entire financial year previous.” Even the sticky Latin America and Caribbean region is seeing high single digit growth, he says. It seems GT is the golden child in the Diageo family right now.
The travel retail industry, he reckons, is still about a year behind the rest of the world in terms of Covid recovery. “I mean, still only 35% of routes out of China have been reopened,” he calculates. “I would say, we’re still rebuilding passengers. When they’re flying, they’re still getting reused to buying again.”
Revenge spend was felt in Fiscal 23 right up until June, he notes. But that’s lapped now. “It’s just not been quite as overt as it was in the domestic markets. And because of the investment, because of the innovation around Johnnie Walker and Tequila, we’ve had the tailwind of new momentum to sort of help us lap that with new consumers, new products, new communications. It’s helped us, I think, navigate that period really well.”
