Diageo raises glass to US turnaround

By Rupert Steiner for the Daily Mail
Updated: 05:14 EDT, 6 May 2011

The return of drinkers hitting the bottle Stateside has helped Smirnoff owner Diageo see strong sales growth over the first three months of the year.

Iconic: Smirnoff is among Diageo's top brands

The world's biggest drinks firm, which also makes Guinness and Johnnie Walker, posted a 7% rise in underlying sales between January and March.

This was well ahead of the 1.8% predicted by analysts who had feared austerity measures in developing markets may have hit trading harder.

Chief executive Paul Walsh, pictured, also credited celebrations around Chinese New Year with delivering solid sales of whisky in key Asian countries, along with growth of beer in Africa.

But it was the turnaround of Diageo's fortunes in the established US market which sent the shares up 18.3p to 1230.3p. America contributed 3% to sales growth which was dwarfed by the 14% rise seen in Diageo's international business which comprises mainly of the booming emerging market countries.

Europe continued to struggle with a fall in sales of 3%. Walsh said that trading in Europe 'continues to be challenging' but a better performance in Britain and Russia offset troubles in Ireland and Greece and a deterioration in Spain.

French rival Pernod, which owns Absolut vodka, also served up strong figures, with sales up 5%, double the 2.5% expected by analysts.