Abu Dhabi hotel openings fuel Diageo sales rise

Diageo, the drinks company with brands including Johnnie Walker and Smirnoff, is poised for further growth after seeing sales rise on the back of new hotel openings in Abu Dhabi.

This growth comes despite the fact that there are strict restrictions on the advertising and sale of alcohol in the UAE.

The company, which is world's largest producer of spirits and is based in London, saw a 28 per cent demand in sales in Abu Dhabi in the fiscal year of 2010 compared to the previous year.

"We're very excited about Abu Dhabi," said Hugo Mills, the general manager in the Gulf region for Diageo. "I think they are very clear about what they want to establish Abu Dhabi as a destination globally. I think we can safely say that it will be a core market for us within the next eight to 10 years."

In a market like Lebanon, the company has relative freedom to advertise. But in the GCC countries in which it is allowed to operate, there are a large number of restrictions. In the UAE, alcohol can only be bought with a liquor licence, in a licenced premise.

No "above the line" advertising of alcohol products is allowed. Diageo works with African and Eastern as its distributor in the country.

"We strongly believe that the combination of global travel and Middle East and North Africa is set for growth," said Jane Ewing, the managing director of Diageo's Global Travel and Middle East business. "We think both of those elements of the business can double over the next five years."

In the MENA region, about a third of the company's business is travel retail business and two thirds is domestic business.

A key part of this involves luring travellers, who typically spend between three to four hours at the airport, into stores.

Diageo today launched its Emporium in Dubai International Airport, as it seeks further ways of promoting its brand here and boosting sales.

Dubai Duty Free is the single largest airport retail operation in the world, with sales last year of US$1.14 billion.

The company saw 16 per cent growth in the fiscal year of 2010 in net sales in the MENA region, compared to 6 per cent growth in 2009 and 22 per cent growth in 2008.