Drinks firm says it will wait and see before investing in marijuana after its profits rise

Diageo keeps an eye on cannabis as gin and tequila sales soar

Diageo, the drinks firm behind Guinness and Johnnie Walker whisky, said it was keeping one eye on the North American cannabis industry, as soaring gin and tequila sales helped boost profits.

Pretax profit rose by 12% to £4.2bn on the back of sales that were nearly 6% higher at £12.9bn, triggering plans to return £4.5bn to shareholders over the next three years.

By far the best-performing spirits in Diageo’s stable were gin and tequila. Led by its Tanqueray brand, gin sales were up 23%, while tequila grew by 37% thanks to the surging popularity of its Don Julio label.

A whisky tie-up with Game of Thrones that spawned White Walker by Johnnie Walker helped boost scotch, which accounts for a quarter of the company’s net sales, by 6%.

Diageo has so far shied away from the strategy taken by rivals such as the US drinks firm Constellation Brands, which bought 40% of the world’s largest cannabis firm Canopy Growth to secure a foothold in the fast-growing industry.

But Diageo’s chief executive, Ivan Menezes, said the company could not rule out following suit, depending on how the market develops for cannabis, which is legal in Canada and some US states.

“On cannabis we’re just tracking it, it’s at a very early stage,” said Menezes, who has been at Diageo since 1997. “We’re looking at the sector, it’s nascent and we just want to understand the consumer behaviour.”

He added that Diageo’s business did not appear to have been affected by the legalisation of cannabis in parts of the US, tallying with research suggesting drinkers have not switched in large numbers to smoking marijuana.

Menezes also said Diageo had no need to follow in the footsteps of multinational beer companies by shelling out for a craft brewery.

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“The ultimate craft brewer is Guinness,” he said.

Diageo has spent £150m on a new Johnnie Walker visitor centre in Edinburgh, which it plans to open in time for the scotch brand’s 200th anniversary next year.

But the plans have been slightly overshadowed by the threat of strike action across its Scottish operations. The company said it was still talking to unions, who rejected a fresh pay offer this week, and hoped to be able to reach a deal.