DRINKS: Cheaper brands hit Diageo sales
GUINNESS owner Diageo recorded strong sales in new emerging markets as underlying sales rose just 5pc.
The world's biggest spirits manufacturer said that within the three-month period, sales were weak in Europe.
Last year's global recession hit the group, as drinkers switched from favourite brands to cheaper offerings.
In particular, chief executive Paul Walsh said, Greek and Spanish customers cut back on their spending as net sales were down sharply year-on-year. These southern European economies were worst affected by the banking crisis.
"The consumer environment in Europe is slightly weaker than we expected," Mr Walsh said in a trading update for its July-September first quarter, ahead of the group's AGM next Thursday.
In the three months ended September 30, 2010, net sales were £2.06bn (€2.27bn) up 5pc from £1.9bn in the quarter ended September, 2009. However, Northern Europe again delivered good net sales growth and Diageo's business in Russia continues to grow strongly, the group said. The European region produces nearly a third of the group's profit.
Spain is one of Diageo's three key markets in Europe, with Britain and Ireland, which together make up over half of the group's European sales.
But the latest update did not provide information on sales in Ireland.