Party Time in Emerging Markets

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Macroeconomics

As if further evidence was needed for the strength of the emerging economies over mature ones Diageo, the global drinks giant, has posted it’s annual results with a breakdown by region. Like the Economists magazine BigMac index which measures purchasing power parity of currencies by comparing the cost of a Big Mac around the world, the Diageo results illustrate the strength of growth in the different regions. Typically for Diageo all regions show growth, as their CEO Paul Walsh has said his company’s brands, from Johnnie Walker whisky to Smirnoff vodka, had faced “world wars, revolutions and more economic downturns than we’ll ever see but the best results have been from growing markets like Latin America, Russia, South Africa and the Middle East. These emerging markets led the way with net sales up 16% and operating profit up 19% compared to North America and Europe with sales up just 3-5% and operating profit 3-10%.

Mind you, we should not take these figures as too strong an indication of the underlying strength of the local market; in times of recession we have all been known to pour a stiff one to calm the nerves and recover a sense of equilibrium!

–Stuart Burns

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