Splashing out: luxury brands put Diageo in high spirits

Cash-strapped Brits may be going out to the pub less often but they are forking out on top-of-the-range spirits when they drink at home.

Diageo, the world's biggest spirits company, saw sales of its Reserve brands like Johnnie Walker Blue Label (£150 a bottle), Johnnie Walker Gold (£60) and Tanqueray No. Ten (£30) soar by 30% in the past year.

Deirdre Mahlan, finance director, said: "Even when people are thinking twice about buying a new car or television there is a sense that they still want affordable luxuries."

Diageo shares rose more than 5%, 56p to 1174p, after it reported a 5% leap in pre-tax profits to £2.36 billion in the year to end-June. Sales after duty were up 2% to £9.94 billion.

Mahlan said the Smirnoff-to-Guinness group had seen a stronger second half as the proportion of its leading brand sales rose. Chief executive Paul Walsh said he was targeting 6% sales growth and double-digit earnings growth over the next few years.

Analysts at Credit Suisse welcomed the "bold targets" and said the results were in "stark contrast" to the poor figures from European brewers over the past fortnight.