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Drinks giant Diageo’s profits surge as millions flock back to pubs and restaurants following the easing of lockdown

THE drinks giant behind Tanqueray Gin and Smirnoff has reported ballooning sales after people rushed back to pubs and restaurants when Covid restrictions eased.

FTSE 100-listed Diageo said sales jumped 8.3pc in the year to the end of June, hitting £12.7bn and sending operating profits 75pc higher.

In North America, where high vaccination rates have meant lockdowns have been eased, sales were up by a fifth year-on-year and Diageo said it expected momentum to grow.

In Britain, Diageo said sales growth continued to be driven by purchases in supermarkets and off-licences, as more people switched glasses of wine for at-home cocktails and gin and tonics.

However, it said demand from bars and restaurants would ramp up as restrictions eased, particularly for Guinness.

Ivan Menezes, Diageo chief executive, said the consumer appetite to socialise at festivals and sporting events was “very strong”.

The update came as Mitchells & Butlers, the pub group behind the Harvester and All Bar One, said its business had bounced back after restrictions were eased on May 17, allowing indoor as well as outdoor trade.

It said in the first five weeks, like-forlike sales were at 98pc of pre-pandemic levels, although this slowed slightly to 89pc of pre-pandemic levels after that.

Mitchells & Butlers said there had been “some sign of improvement following further easing of restrictions on ‘freedom day’ in England”.

Hotel group Accor, meanwhile, said it was seeing a mixed picture across its markets, although said its recovery was “gaining traction” thanks to the vaccine roll-out and more borders reopening. Revenue at the group, which runs the Sofitel and Ibis hotels, was down 10pc on the first half of 2020 at €824m (£700m), while revenue per average room remained 60pc lower than 2019 figures.

Others in the leisure sector have reported seeing a similar rebound, and cinema chain Everyman Media Group said it had returned to profitability after it was able to reopen in May. In the weeks between then and July 1, admissions were at 66pc of 2019 levels, ahead of its own expectations. This was despite capacity restrictions remaining in place at its cinemas.

Separately, last year’s lockdown puppy boom has pushed revenues up at Pets at Home.

Sales at the retailer rose to £377m in the weeks to July 15, up 29.4pc on the same period the year before coronavirus.