By Simon Zekaria
LONDON--Global drinks giant Diageo PLC (DGE.LN), maker of
Johnnie Walker scotch, Guinness stout and Smirnoff vodka, said
Tuesday that it doesn't anticipate an improved economic outlook in
Western Europe this year.
"We are not seeing a real improvement," said Andrew Morgan,
president of Diageo's European operations, on the sidelines of a
retail convention.
The U.K.-based liquor company targets half of its revenue coming
from emerging markets by 2015, up from almost 40% currently.
Meanwhile, in mature markets like Western Europe and the U.S., the
industry faces pinched spending by consumers faced with austerity.
In Europe, weak economic conditions, particularly in the south,
continue to hit demand across the region.
Still, Mr. Morgan said Diageo is finding "pockets of growth" in
Europe, naming Germany and Russia as two key markets.
The company's European sales, excluding acquisitions, disposals
and currency effects, fell 1% in its fiscal year ended June 30, an
improvement from a 3% decline in the previous year. However, the
region swung to an operating profit as the group reined in
costs.
Separately, Mr. Morgan said he is "hopeful" the government of
the Czech Republic will shortly end fully its ban on sales of hard
liquor in the country, which was introduced last month following
deaths and injuries from methanol-laced bootleg alcohol.
"You can understand why [the government took action]," Mr.
Morgan said.
The executive noted that Diageo's operations in the country,
where its brands are distributed through local importers, is small
in the context of its wider business.
Write to Simon Zekaria at simon.zekaria@dowjones.com
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