Pink gin and other launches drive strong growth in Europe and UK for drinks firm

This article is more than 2 years old

This article is more than 2 years old

A growing thirst for gin among UK consumers boosted annual sales at the drinks firm Diageo, which benefited from the launch of a pink version of the spirit.

The international drinks group said total UK sales rose 8% in the year to the end of June, thanks to a double-digit rise in sales of Tanqueray and Gordon’s, which introduced a pink gin last summer.

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Gin sales helped to offset the waning popularity of vodka, with sales of Smirnoff down 2%. Sales at the group’s Guinness business were also strong in the UK, up 8%, driven partly by its new Hop House 13 lager, which uses the same yeast as the Irish stout.

Diageo said gin was the fastest-growing category across western Europe, with sales up 22%.

Gordon’s launched its pink gin last summer, capitalising on the Instagram-inspired popularity of colourful drinks and cocktails. The trend has been linked to a penchant for kitsch among millennials, with unicorns and flamingos appearing on everything from pool inflatables to biscuits this summer.

The brand’s pink gin, which is flavoured with raspberry, strawberry and redcurrant, competes with drinks such as Burleighs’ version containing preserved Japanese cherry blossom, pink grapefruit, hibiscus and rose flowers, and a Beefeater tipple flavoured with strawberries, which launched in the UK this spring.

Flavoured gins have accelerated a revival of gin that began in 2009 with the launch of the Sipsmith craft brand and was followed by the launch of dozens of local distilleries. Supermarkets have also cashed in with own-label craft sprits, while the discounters Aldi and Lidl have put premium flavoured gins at the heart of their plans for Christmas this year.

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Internationally, Diageo said sales of gin rose 14%, only outperformed by tequila – sales of which soared 56%, driven by strong growth in the US and Mexico – while vodka dived 6% and rum was down 4%.

“The resurgent European gin market is compensating for weaker vodka sales … The gin craze that is helping Fever-Tree reach spectacular new heights is powering Diageo, too,” Neil Wilson, an analyst at Markets.com, said.

An overall 5% rise in sales to £12.2bn, slightly ahead of expectations, helped lift operating profits by 4% to £3.7bn. Shares slipped just over 1% as Diageo announced plans to buy back £2bn of shares.

