Diageo invests in gin following sales surge

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Drinks giant Diageo (LSE: DGE.L - news) is pouring fresh investment into its gin brands, Gordon’s and Tanqueray, to take advantage of a surprise surge in sales of the spirit in hard-hit economies such as Spain and the UK.

The booming popularity of retro gin-based cocktails such as the French 75 in cities including Madrid and London is driving a resurgence of the spirit, predominantly made with juniper berries.

The French 75, which combines gin and Champagne, was supposedly named after an artillery gun used by French forces in World War One.

Despite record unemployment in Spain , its gin market grew 20pc last year, according to Ed Pilkington, Diageo’s global category director for vodka, gin and rum.

And a trend which started in Spanish bars of offering extensive gin menus has spread to the UK and the US. In the UK, gin sales are growing at 12pc in pubs, bars and restaurants, and by 5pc in off-licences and -supermarkets, according to data from research group Nielsen.

Diageo has embarked upon what it describes as its “biggest ever innovation drive” behind Gordon’s to tap into the gin resurgence. It will next month launch a collection of flavoured gins, such as Gordon’s Crisp Cucumber, supported by a £1m marketing campaign.

The group is also bringing back a limited edition version of Tanqueray Malacca, which it discontinued last decade, following demand from bartenders.

Mr Pilkington said the popularity of more expensive “premium” versions is particularly strong and Diageo hopes the taste for gin will spread to high-growth regions of the world, such as Latin America.

“What we’re really excited about is it’s growing in parts of the rest of the world as well,” said Mr Pilkington. “In Bogotá [in Colombia], there are lots of bars now where gin is really hot. ”

Pernod Ricard (Paris: FR0000120693 - news) said sales of its Beefeater brand reached a record 2.5m nine-litre cases last year .