Scotch segment growing fast, Diageo targets double-digit topline growth
In an interview with CNBC-TV18, Hina Nagarajan, MD and CEO, Diageo India, mentioned that the company is happy with the current demand momentum that it is witnessing. She mentioned that scotch segment is growing at a fast pace. Despite the supply chain constraints and cost inflation, the company has its sight set on achieving double-digit topline growth.
In an interview with CNBC-TV18, Hina Nagarajan, MD and CEO, Diageo India, mentioned that the company is happy with the current demand momentum that it is witnessing. She added that the company is entirely focused on sustaining it. She believes the innovation and renovation undertaken by the company has been accepted well by the customers.
She said, "I am happy with the current momentum on demand and we are focused on sustaining it. We think we are well positioned; our renovation and innovation uptick has definitely been accepted very well by the consumer."
Delving deeper into segments, she added that scotch segment is growing very fast. She explained that the company’s focus is on delivering double-digit topline growth.
"Scotch is growing quite fast. It is difficult to say where it will go, but it is going to be definitely an important driver of our growth. We have committed in our strategy to deliver sustainable double-digit profitable growth and we are ruthlessly focused on that," she mentioned.
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With the ongoing pandemic-induced lockdowns and supply chain issues that businesses have been grappling with, she explained that Diageo experienced some disruptions too in the last few weeks. She said that import supply chain got impacted, however, she doesn’t expect it to carry on for too long.
"While in the last few weeks, we've seen some disruptions, we don't expect to carry on for too long," she added.
Highlighting inflation that Diageo is seeing with glass price, she believes cost inflation of 4-5 percent will continue, going forward as well. Nagarajan explained that portfolio inflation of 2.5 percent has been mitigated when compared with favourable product mix. The company is in the process of making representations to the state governments for price hike to mitigate inflation.
"We did see a portfolio inflation of about 2.5 percent, which we mitigated partially through our favorable product mix and our everyday efficiencies. We expect portfolio inflation to be in the 4-5 percent range. We are making strong representations to the different state governments to give us flexibility on pricing, given the extraordinary inflation," she said.
On margin, she said that it will likely remain in the mid to high teen range.
"We have given the guidance of mid to high teens and in the last few years we have been inching towards the mid. Our focus is on managing all the levers; we have to remain within this range. Obviously, we would like to get to the high teens and sustain that. So we're going to continue to navigate to deliver this guidance," Nagarajan said.
Watch the video for the full interview
(Edited by : Dipikka Ghosh)
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