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Diageo sees boost to margins as bars, restaurants open

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FILE PHOTO: A bartender takes a bottle of Johnnie Walker whisky at Barmaglot bar in Almaty
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  • DEO

(Reuters) -Johnnie Walker whisky maker Diageo Plc said on Thursday its new financial year was off to a "strong start" and forecast a boost to operating margins as people opt for premium brands and spend more at restaurants and bars.

Recovery in Europe has been ahead of its own expectations, while in North America, despite supply constraints, the business has been "performing strongly", the company said in a statement ahead of its annual general meeting later in the day.

Sales at bars and restaurants, hit by COVID-led restrictions last year, are recovering strongly in both regions as higher vaccination rates encourage more people to venture out.

Sales in Africa, Asia Pacific and Latin America and the Caribbean markets are also performing well, but Diageo warned it expects some volatility in these markets to persist.

"We have made a strong start to fiscal '22 ... as we benefit from resilience in the off-trade (retail) and continued recovery in the on-trade (bars and restaurants)," Chief Executive Ivan Menezes said.

The company is also benefiting from customers trading up to more premium drinks and from a rise in sales through higher margin channels such as e-commerce, Menezes added.

(Reporting by Siddharth Cavale in Bengaluru; Editing by Saumyadeb Chakrabarty)