Diageo, Pernod beat Q3 estimates as emerging markets say ‘cheers’

London-based spirit-maker Diageo Plc, the world's biggest distiller, and its Parisian rival Pernod-Ricard SA, the second-biggest, both reported revenues on Thursday that beat analysts' forecasts, as whisky and cognac purchases in emerging economies offset tough conditions in European markets.

Both companies gained from growth in Asia, Latin America and Africa and gradual recovery in North America that helped to offset weakness in Europe, hit hard by tough economic conditions in Greece, Ireland and Spain.

Organic sales in the third quarter ended 31 March, which exclude the effect of disposals and acquisitions, rose 7 per cent at Diageo and 5 per cent at Pernod-Ricard.

Liquor companies including Diageo (the maker of Smirnoff, the world's largest-selling vodka; Johnnie Walker, the largest-selling whisky; the iconic Guiness beer, and Jose Cuervo, the largest-selling tequila) and Pernod (which makes whiskies like Glenlivet, Chivas Regal and Ballantine's as well as the famous Martell cognac) are looking to emerging markets to drive growth as consumer spending slows because of difficult economic conditions across Europe.

Both distillers reported gains in developing economies that outpaced European sales, as waning consumer confidence and declining sales in countries including Spain and Greece offset improvements in Russia, the UK and Germany.

Overall growth was aided by consumers choosing more expensive brands. It was also helped by a gradual improvement in North American trading, the companies said, ''albeit modestly,'' according to Diageo.