Diageo, the world’s largest distiller, may take five years to recover sales lost in the recession, as emerging markets fail to fill the void left by US and European drinkers shunning pricier drinks.

The maker of Smirnoff vodka and Johnnie Walker whisky is unlikely to surpass the 145 million cases of liquor it sold in 2008 until the 2013 fiscal year, according to a survey of analysts by Bloomberg. The volume of spirits sold by Diageo probably fell 2.8 percent in the six months to December 31, led by declines in the US and Europe, the survey shows.

Diageo generates more than 70 percent of earnings in North America and Europe, where it has pursued a strategy of so-called premiumisation – which entails convincing consumers to buy more expensive versions of its main brands, such as Johnnie Walker Black Label. As consumer confidence waned in both regions, people drank more at home, rather than in bars, and bought cheaper booze.
Diageo went through an unusually strong phase of growth in the US through the last decade, but a lot of those drivers for spirits will be a bit anaemic,” said Alex Oldroyd, an analyst at Barclays Capital. “If they have to rely on emerging markets, it’s going to take some time to get back to the earnings growth they were delivering prior to the crisis.”

Diageo generates about 30 percent of earnings from emerging markets. That is less than main rival Pernod Ricard’s 32 percent and Remy Cointreau’s 35 percent, according to UBS. Emerging markets, such as Brazil, exited recession more quickly than Europe and the US, while economies in China and India continued to grow throughout the crisis.

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