Diageo (NYSE: DEO) reported its fiscal year 2021 earnings on Thursday. The international beverage alcohol company, whose Q4 ended June 30th, had an impressive year all around. The company reported “strong growth in net sales, operating profit and cash generation.”

Diageo’s diverse portfolio of ready-to-drink (RTD) beverages helped secure its strong F21 numbers.

DEO reported a 16% growth in its topline organic sales over F21, with an 8.3% increase in net sales. The multinational company, which is headquartered in London, also reported a 17.7% increase in organic operating profits as well as $4.19 billion in cash flow generation, up from $1.95 billion. Diageo’s pretax profits were $5.16 billion for F21.

The spirits and beer giant operates in nearly 200 countries, however its organic growth in North America was particularly noteworthy, coming in at 20% in F21. Diageo’s CEO, Ivan Menezes, stated, “We delivered organic net sales growth across all regions, led by a strong performance in North America…” With North America’s growing love of ready-to-drink (RTD) beverages, it is not surprising that the company has been making moves to expand its offerings within the category.

Diageo is home to titan brands including Guinness, Captain Morgan, Crown Royal, Ketel One, Tanqueray and Johnny Walker. Many of the company’s brands have RTD lines of their own.

Category Growth by Acquisition

This past year DEO doubled down on the category and expanded its RTD portfolio by acquiring two US ready-to-drink brands. In March the company acquired Texas-based Far West Spirits. Far West makes Lone River Ranch Water, a line of hard seltzers made with agave and inspired by the legendary West Texas Ranch Water Cocktail.

A month later, in April, the company acquired a second RTD brand, Rhode Island-based Loyal 9. Loyal 9 crafts a line of canned cocktails featuring real vodka and juice.

Debra Crew, President of Diageo North America, said of the acquisitions, “We have a clear strategy to build and diversify our RTD offerings across price points and consumer segments, and Loyal 9 is a great addition to our portfolio, which is also growing through the recent acquisition of Lone River and innovations from several of our brands.”

Smirnoff Ice is On Fire

Diageo may be expanding its lineup of RTD products as of late, but the company is not an RTD novice. DEO is home to one of the oldest RTD brands on the market, Smirnoff Ice. The line of bottled malt beverages features 18 sweet, fruity flavors and has boosting popularity through innovation. Smirnoff Ice was born in 1999, the same year another RTD pioneer, Mike’s Hard Lemonade, hit shelves.

Smirnoff’s RTD products include a line of canned spiked sparkling seltzers, as well as Smirnoff Ice Smash, which features a combination of two flavors in one, and Smirnoff Sourced, a line of bottled malt beverages made with real juice.

The brand’s Black Cherry Seltzer earned a Double Gold Medal and was named Best of Class in its category at this year’s San Francisco World Spirits Competition. 5 Smirnoff Seltzer flavors were awarded medals at the competition.

Spirited RTDs

Diageo’s Crown Royal launched a line of whisky-based canned cocktails in March of this year. The cocktails debuted in three flavors including Peach Tea, Whisky & Cola, and Washington Apple. Each variety has an ABV of 7% and can be purchased in packs of individual flavors.

Ketel One entered the RTD category in 2020, releasing a Vodka Spritz line in three flavors including Grapefruit & Rose, Cucumber & Mint, and Peach & Orange Blossom. Each flavor contains Ketel One Vodka, botanicals and sparkling water. The varieties all feature an ABV of 3.6%.

Tanqueray also got in on the RTD action last year, launching three canned cocktails featuring the brand’s award-winning gin. The line of cocktails includes a classic Gin & Tonic, Sevilla Orange Gin & Tonic and Rangpur Lime Gin & Tonic. The beverages come in 12 ounce cans and have an ABV of 6%.

Menezes is looking forward to the new fiscal year. He insists the company “is well positioned for the future.” Diageo is ready to take on F22 and thanks, in part, to its growing RTD portfolio, the alcohol beverage company has set itself up for continued success.

Shirani Jayasuriya
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