The market leader in spirits, Diageo Australia, which sells brands including Johnnie Walker, Smirnoff, Baileys and Bundaberg Rum, has suffered its third successive drop in annual profit in a market where the power of the two big liquor retailing chains, Woolworths and Coles, is increasingly influential.
But the Australian arm of the global spirits giant says it has been able to increase its market share marginally to 32.5 per cent and is looking to the increasing trend of more people drinking spirits at home to revive profit in 2016, fuelled by advertising campaigns such as those fronted by Master Chef judge Matt Preston. 
The Australian arm of the global spirits giant made a net profit of $25.6 million in 2014-15, down 4.1 per cent from the previous year, when it had net profit of $26.7 million. It extends a profit tumble from the $43 million in net profit after tax the company made in 2012-13 and the $44.7 million it generated in 2011-12.
Sales revenue in the 12 months ended   June 30, 2015, for Diageo Australia crept ahead to $523 million from $517.4 million in the previous year. Sales reached $542 million in 2012-13.
Diageo Australia makes about 80 per cent of its total sales to liquor retailers, with the bulk going to Woolworths and Coles. The remaining 20 per cent of sales come from hotels, bars and other licensed venues.
The latest financial results lodged with the Australian Securities and Investments Commission were the last under former managing director Tim Salt, who resigned on   June 30, 2015, and has joined bathroom fixtures and toilets company GWA, where in a succession plan he will become managing director in mid-2016.

Margins under pressure
GWA makes Caroma, Fowler, Clark and Dorf sinks, taps and toilets, where profit margins are under pressure because of the falling Australian dollar, with the company manufacturing most of its products in China.
In   September 2015 Diageo Australia appointed as its new chief executive David Smith, who has worked for the British-based drinks group for more than 25 years.
A spokeswoman for Diageo Australia said the market remained competitive but Diageo's market share had increased to 32.5 per cent in   October 2015, from 31.9 per cent a year earlier. The company's Captain Morgan rum had been a strong performer and had increased by 50 per cent in value terms compared with the previous financial year.
The sharp rise in taxes of 70 per cent on ready-to-drink spirits put in place by former prime minister Kevin Rudd continued to have an impact, the spokeswoman said. 
"The punitive tax on pre-mixed drinks continues to impact the category," she said. 
Chris O'Brien, the general manager of the Liquor Barons chain of 64 outlets in Western Australia, said there was a strong seasonal component in the spirits market and it was probable there would be a spurt in sales in the next fortnight as customers hunted for gifts.

Strong support
The prestige brands continued to attract strong support in a market where there was a trend to trading up and drinking better, Mr O'Brien said.
The week before Christmas delivered the biggest increase in spirits sales, he said.
"It really revolves around gift-giving." 
Treasury Wine Estates, the owner of wine brands Penfolds, Wolf Blass and Wynns, bought Diageo's wine business in   October for $754 million, which gave it ownership of several top-quality United States brands and the commercial brand Blossom Hill.