Good morning, everyone. I'm pleased to share another strong set of results which demonstrate the progress we're making towards our ambition to be one of the best performing, most trusted and respected consumer product companies in the world. Let me start by thanking We are doing this by making progress against our strategy and support premiumization in developed markets through the effective execution of our 6 priorities. The consistency of the performance we are delivering and the momentum we have in all four measures of our progress demonstrates that we are a stronger company We are more while managing challenging conditions in some of our markets. Let me share the highlights of Organic net sales grew 4.2 percent driven by volume growth and strong pricemix with broad based growth across categories and regions.
Organic operating margin expanded by 81 basis points with our productivity work enabling an up weight in marketing investment and margin expansion. We delivered another half of strong free cash flow broadly consistent with last year. EPS pre exceptionals is up 9.4% driven by organic growth and lower finance charges. We returned about 1,000,000 to shareholders in the first half through share buyback and increased the interim dividend by 5%. We are delivering consistent performance through the rigorous execution of our 6 priorities We've delivered another half of top line growth above 4% in line with our medium term guidance.
The growth is broad based across regions and categories reflecting the breadth of our portfolio and geographic reach. The consistency of our performance is also coming through in organic operating margin improvement further expanding our margin by 81 basis points in the half. And we've delivered 4 consecutive years of strong free cash flow performance which we've sustained in the first half. We continue to see solid growth In scotch momentum on Johnny Walker, our flagship scotch brand and primary scotch has continued while performance on some of our other scotch brands was impacted by challenging conditions in a few markets. In U.
S. Spirits where all our key brands, except vodka, have continued category share gains, growth was a bit slow in the first half lapping a strong first half innovation program in the prior year. In India, net sales grew 2% an improvement versus the second half of last year, which was broadly flat. While I'm pleased with this performance, I will update you later and the 3 focus areas demonstrates the consistent and effective execution of our strategy through our 6 execution priorities. We have become a reliable compounder of growth using our brand portfolio and geographic footprint coupled with our agility to deliver consistent top line performance.
Our productivity program is on track and has enabled us to up weight investment in our brands and continue to expand margins. And we continue to deliver strong cash flow. This reinforces our confidence in delivering of organic margin improvement in the let me hand over to Kathy to cover these results in more detail.
Thank you Ivan and good morning everyone. We have delivered another strong set of results, demonstrating continuing progress against the measures we track to deliver efficient growth and value creation. Organic net sales growth was up 4.2%, driven by volume growth of 1.8% and positive pricemix. Organic operating margin was up 81 basis points, supported by momentum behind our productivity activities. This was better than expected by 35 basis points as we were able to pull forward employment benefit savings from the second to the first half.
This half, we delivered another strong performance on cash. Free cash flow was about 1,000,000,000, broadly consistent with last year, despite a one off payment of 1,000,000 made to HMRC for the preliminary UK tax assessment that we disclosed last year. This was partially offset by working capital driven by organic operating profit growth and improved finance charges. Return on invested capital improvement was primarily driven by operating profit which builds on the 12% increase that we achieved for the full year in fiscal 2017. Overall, This is another strong set of results.
Let me take you through the numbers in more detail. Reported sales were up just under 2% as organic growth was partially offset by unfavorable exchange. This arose predominantly from the strengthening of the pound sterling versus the US dollar as well as the weakening lira in Turkey and the Naira in Nigeria. Organic net sales growth was driven by 1.8% volume growth and 2.4% positive pricemix. We saw volume growth across all regions, except for Asia Pacific which continues to be impacted by short term volatility Pricing remains muted in our developed market and overall is broadly in line with fiscal 2017.
Net sales growth was slightly higher than despite the later timing demonstrating the breadth and strength of our portfolio with truly global geographic reach and broad based participation across most categories and price points. In North America, U. S. Spirits net sales were up 2.9% in the half, lapping a strong first half innovation program in the prior year. Pricing continues to be muted with net sales being driven by volume and mix.
U. S. Spirits saw growth across all categories, except vodka. Don Julio performed particularly well in the half, and continues to take share in due to lapping the launch of Crown Royal Vanilla. Other good performances came from Bailey's and Captain Morgan, both gaining share in their respective categories.
In vodka, performance continues to be subdued. The main drivers here are KetelONE Vodka and Sarac, while Smiranoff declined at a slower rate than the last full year. Europe and Turkey continued to deliver consistently strong performance, with this half mainly attributable to volume gains. Price mix was largely due to the positive impact of price in Turkey being offset by negative pricemix from Gordons And Vailies in Europe. Africa performance was mixed with double digit growth in Nigeria being part offset by weakness in Africa Regional Markets And South Africa.
East Africa net sales were flat, reflecting the impact from active positive price in Nigeria, being more than offset by faster growth in mainstream spirits in East Africa and Nigeria, as well as the competitive environment driven mainly by strong performance in pub and Mexico. The negative pricemix in the region primarily resulted from the expansion of primary scotch brands. We delivered strong double digit growth in Primary Scotch in Pub, Mexico and Colombia. This was offset by a decline in In Asia Pacific, lower volumes were caused mainly by India. As I mentioned, the popular segment there is in decline.
Additionally, we saw volatility impacts from the Supreme Court ruling prohibiting the sale of alcohol and certain outlets near certain state highways. As well as the route to market changes in certain states. These negative impacts were partially offset by lapping demonetization in the prior year. Positive pricemix in the region was driven by scotch growth at just under 5% across the region, another strong performance from Chinese white spirits and India. We continue to see broad based organic growth across key categories, except for vodka, Our largest category scotch was up 3% with broad based growth across all regions except Africa, which was impacted by challenges within with net sales up 7% as well as our primary scotch brands, where net sales increased 8%, largely driven by Black and white and Latin American in Caribbean and Asia Pacific.
Elsewhere, Windsor net sales declined double digit as it continued to suffer from the category decline in Korea. And old par performance was impacted by the tax regulation changes in Colombia that I mentioned earlier. Net sales in scotch malts were up 3% with growth in North America, mainland China, Southeast Asia, and travel retail Asian, Middle East, partially offset by the weakness of Singleton in Taiwan. The decline in vodka slowed compared to our last fiscal year. Challenges in the U.
S. Are driving the overall global performance. Outside of the U. S, vodka was up 4%, compared to up 1% in fiscal 2017. Net sales in North American whiskey were up 4%.
In the U S, Crown Royal continues to gain category share in U. S. Spirits, albeit with net sales growth slowing as we lapped the launch of Crown Royal Vanilla in the first half of fiscal twenty seventeen. In American whiskey, Bulle continues to drive growth and gain category share in both North America and Europe. In rum, net sales were up 5% with broad based growth across the regions.
Captain Morgan, up 6% and Zicata up 21% were the key drivers in our biggest markets: U. S. Spirits and Europe. Lacor's grew 5%, driven mainly by Bailey's and U. S.
Spirits, where the brand grew double digit, benefiting from the new media campaign and increased investments in sampling activities. Indian Made Whiskey was up just 1%, with overall net sales negatively impacted by the headwinds I covered previously. We continue to see growth from McDowell's number 1 and signature within the Prestige and Above segment, which was up 6%, partially offset by declines in the Popular segment. Gin net sales were up 16%. Growth was strong and broad based across all regions.
Tangeray and Gordons were both up double digit fueled by strong performance in Europe. Tequila delivered an impressive performance, driven by Don Julio in both of its biggest markets, U. S. Spirits and Mexico. In beer, net sales performance improved up 4%.
Growth was driven by Guinness in Europe and Africa and by Dubic MALT in Nigeria. This more than offset declines in Senator reflecting the recent period of political uncertainty surrounding the presidential election in Kenya. Net sales growth was broad based across our portfolio of brands, which illustrates its strength. Global Giants had a strong half and were up 5%. Growth was broad based across all brands with the exception of Smirnoff whose net sales were down 1%, driven by the U.
S. And also South Africa where we saw increased competitive pressure in the market. Local stars were up 5%, led by the strong performance delivered in China, with Chinese white spirits as well as Crown Royal in the U. S. Reserve performance was up double digit overall in the half.
With Chinese white spirits, Don Julio and Johnny Walker being the biggest contributors to the growth. Reported operating profit before except items was up just over 6% with good organic growth offset by a modest impact from unfavorable exchange. Organic operating profit grew 6.7%. Reported operating margin, excluding exceptional items, increased 138 basis points, driven mainly by organic operating margin improvements. In addition, we saw some improvement from the lower of negative impact of exchange on operating profit versus net sales due to our hedging program, which delays the timing of the exchange impact on profit.
On an organic basis, operating margin expanded 81 basis points. We are pleased with how this improvement was delivered, with our productivity work supporting the increase in marketing with much of the reductions in overhead still flowing through to the bottom line. Let's dig into this in a bit more detail. I'll start with marketing. Our investment in growth behind marketing, up 7.5%.
We are confident in our improving capability to invest in effective marketing activity and we're delivering more improved marketing efficiencies. These efficiencies were broad based across regions and were delivered by continuing to work with The savings span across most marketing activities, including media, experiential and right through to point of sale. Overall, our marketing investment rate increased by over 40 basis points with increased investment rates in all regions, led by the U. S. Where our spirits business investment rate was up 71 basis points.
Given scotch as a key area of focus, we increased the investment rates here with Johnny Walker, a big beneficiary of the higher marketing spend. I'd like to come back to the enablers behind our margin expansion. Gross margin was broadly flat in the half, with productivity savings and positive pricemix offsetting cost of goods inflation and some smaller one off costs like the impact on rum production from the hurricanes that occurred in the Caribbean. Reduced overheads were the big driver of our margin improvement. Our productivity initiatives focus on tight management of every line item within overheads, and our actions to reduce these costs delivered strongly in this half.
We saw a benefit coming through from the work on organizational effectiveness and also the benefits from the 2nd year of 0 based budgeting. These positive effects drove almost all of the 122 basis points and other operating items. Operating margins were higher than expected largely as a result of the acceleration which positively impacted margin by 35 basis points. Additionally, a bit of the phasing of our A and P reinvestment has moved to the second half. Looking to the full year, our expectations for fiscal 2018 remain unchanged, We continue to expect organic net sales growth roughly in line with last year and consistent with our mid term guidance of mid single digit top line growth.
On margin, we expect continued progress towards our goal to deliver 175 basis points of improvement for the 3 years ended June 2019 with more of the remaining margin expansion coming through in fiscal 2019, as we expect to have less cost to absorb and we'll get greater benefits from our investments in net revenue management and marketing catalyst capabilities. Our margin performance and increased investment in marketing has been made possible by embedding a culture of productivity improvement throughout the business. Last July, we announced an increase in the savings we expect to deliver, and I'm happy to report that we're on track to meet that bigger goal. We've made good progress in each of the 5 work streams and you can see it in our results. On net revenue management, We are building commercial plans in a more systematic way using the 5 levers of pricing, promotion, trade terms, formats and mix.
Brazil is a good example of how we are using formats as an NRM tool. Small formats enable more accessible price points and extend our access to new consumer occasions. In Brazil, we introduced a 250 ml PET pack developed for festival events, which typically ban glass packaging. Deploying this new format is driving the penetration of scotch into new occasions. Smaller formats also allow a higher price per ml given the consumer benefit from the fit for purpose size and pack.
On marketing, I've already discussed the benefits we're seeing through continued improvement in efficiency. We're also looking to get our pounds to work harder by driving improved effectiveness enabled by the rollout of our marketing catalyst tool. We used Catalyst to plan and allocate our marketing spend across markets and brands at the beginning of the tiers are using Catalyst in their day to day roles to continuously optimize their spend based on the most current data. It's making a real difference. In India, for example, marketing teams have used catalysts to inform decisions on reallocation of McDowell's number one media plan spend by state and they've improved the rate of return.
And on Royal challenge, we identified the opportunity to increase spend and reallocate 1,000,000 of value compared to the original plan. Moving to supply, we are driving cost of production down through a number of work streams. Nigeria, as an example, has made most progress in the supply areas that we categorize as make and move. In make, we have successfully reduced process waste and improved efficiency in the collection of CO2. In Move, we have changed the way that we work to cut down on the amount of interplant movement between the two production sites.
Finally, the biggest contributor to our margin improvement this half was from overheads, which I've already discussed a bit. In addition to the cost savings, the changes that we're making in our organizational structures makes us a simpler flatter company and enables faster decision making. Now let's move on to cash and working capital. Cash delivery continues to be strong with free cash flow over 1,000,000,000, slightly behind last year, with growth in operating profit being offset by a Working capital improvements yielded about a 70 basis point reduction in average working capital as a percent of net sales versus the end of last fiscal. With improvement across all working capital lines.
The favorable year over year movement was primarily driven by creditors These gains were offset by a higher rate of growth in maturing stocks to meet future demand for scotch and North American whiskey. Net CapEx increased 1,000,000 versus last year. Looking ahead for the full year, I would now expect our full year CapEx spend to be in the range of 1000000 to 1000000. Tax payments were 101000000 higher year over year driven by the 1 off payment made to HMRC in August. Interest payments were lower than last year by 1,000,000 mainly as a result of the maturity of higher coupon, longer term U.
S. Dollar bonds and the more efficient use of commercial paper. Average net debt decreased by approximately 1,000,000 as continued strong free cash flow was partially offset by the execution of Our effective interest rate decreased 50 basis points to 3.0 percent, driven by a very efficient debt refinancing where higher coupon bonds were replaced with bonds with more favorable interest rates, as well as the higher use of commercial paper. For the full year, with some risk of floating rates rising. Other finance charges were broadly the same as last year, in line with our expectations as lower pension charges offset the increased valuation of the Zicata option.
I expect other finance charges for the full year to be roughly in line with fiscal 2017. We have a transparent and disciplined approach to our capital structure and how we prioritize the allocation of capital to maximize value for shareholders. The key principle underpinning our current structure is the commitment to a leverage range of 2.5 to 3 times. Which is broadly consistent with maintaining our current A- long term credit rating and enables both capital efficiency and flexibility through the economic In August, we closed our Casa Migos acquisition, which strengthens our position in the fast growing super premium segment of the tequila category in the U. S.
We have announced an interim dividend of 24.9p per share, up 5% from the previous year. We have a progressive dividend policy and we expect to maintain a mid single digit increase until we rebuild dividend cover back to our target range of 1.8 to 2.2 times. We continue to make progress with our cover closing in the half at one point seven times. At the end of fiscal 2017, our leverage was well below our policy range, with adjusted net debt to EBITDA at 2.0 times. As a result of our significantly reduced leverage, and confidence in delivering sustainable and consistent cash flow, the board approved a share buyback program to return up to 1,500,000,000 of capital back to shareholders.
We're on track at the end of December with $760,000,000 having been utilized to repurchase 29,500,000 shares with these shares having been canceled. Our adjusted net debt to EBITDA at the end of the first half increased to 2.2 times. This planned increase arose from higher adjusted net debt, which was up by 1,000,000,000 partially offset by increased EBITDA. Moving now to exchange. Adverse exchange in the first half has been led by the weakening of the U.
S. Dollar the Turkish lira and the naira in Nigeria, impacting net sales by 1,000,000 and operating profit by 1,000,000. Using the rates outlined here for the full year, exchange is forecast to adversely impact net sales by roughly 1,000,000 and operating profit by about 60,000,000. There are still a few variables around exchange in fiscal 2018, which could affect this forecast. These include any further movement on I would note that we are using current spot rates as well as unhedged transaction exposure.
Earnings per share before exceptional items increased 9.4% in the first half. The organic operating profit growth and lower finance charges more than offset the negative impact of exchange and higher tax expense Our tax rate before exceptional items reduced from 20.9% to 19.8% in the first half. Our current expectation is that the tax rate before exceptional items for fiscal 2018 will be approximately 20%. A one percentage point improvement versus our prior guidance. The decrease for fiscal 2018 is principally driven by the headline rate reduction in the U.
S. Basic EPS increased 36% due to the balance sheet remeasurement of our U. S. Deferred tax liabilities as a result of the headline rate reduction, resulting in an exceptional tax credit. So we have delivered a strong start for fiscal 2018.
Building on good results last fiscal and despite facing a number of challenges in some parts of the business. This has enabled good progress against our measures of efficient growth and value creation. We have shown how our productivity work is supporting investment in growth and improved margins. I'm pleased with our progress and 175 basis points of organic operating margin expansion in the 3 years ended June 30, 2019. And with that, I'll hand it back to Ivan.
Thank you, Kathy. Kathy shared the results on the first two measures that tracked the progress made against our performance ambition, efficient growth and value creation. At our year end results, I'll update you on our annual employee value survey results I shared with you at the end of fiscal 2017 the progress we have made to become one of the most trusted and respected consumer product companies in the world. While I'm proud of the Agios track record in this area, there is more we can do. To this end, we have developed ambitious new targets for 2025 for our Alcohol And Society Program demonstrating our commitment to promoting positive drinking experiences By 2025, we will educate 5,000,000 young people, parents and teachers about the dangers of underage drinking by consolidating the Aja's efforts behind a global program called smashed.
It's a theatre based approach aimed at twelve to sixteen year olds and designed to increase student knowledge about the dangers of alcohol misuse. In December, we announced that we surpassed a year early our target to collect 5,000,000 pledges to never drink and drive by activating join the packed campaigns in over 40 countries. We will now with moderation messages from our brands. As an example, in the United States Crown Royal is embracing the responsibility that comes with our category leadership position. Crown Royal has created the water boys who have engaged Tens of thousands of fans at Football stadiums and sports bars across America to educate them on moderate drinking handing out bottled water.
Our 6 priorities underpin the delivery of our strategy: disciplined execution of our 6 priorities across the business is enabling the delivery of consistent results. Deploying our 6 execution priorities in Mexico over the last few years has created a vibrant business that is delivering consistent growth and share gains. We are seeing strong results with our premium core brands growing double digit in the past few years. Our marketing focus has evolved significantly with each brand supported by a purpose driven platform which is driving recruitment. Great examples include Johnny Walker, connecting with Mexico's current mood of overcoming all obstacles, with our Keep Walking Mexico and el Camino as hoi campaigns.
Buchanan is focused on strengthening the brand's status and credential queues with the choose great campaign. We're revitalizing Smart Off by reminding consumers that it Black and White is our flagship primary scotch brand, and we've seen great success with it. It's premiumizing the primary scotch category and recruiting from the value segment. Over the past 4 years we've taken black and white from regional distribution and awareness to national distribution and awareness. In the process, we've increased volume to over 8 times and share a primary scotch to over 5 times what it was 4 years ago.
And in the first half, Black and White gained the leadership position in the primary scotch category. We are the We have grown the business double digit over the past few years and increased our already high share by more than 250 basis points. We've done this with a shift from a seeding model with presence in 3 cities to national presence and also expanding from trend leading accounts into the broader premium accounts universe. We have a strong innovation agenda aimed at recruiting consumers into spirits aligned with the 3 global pillars of recruit re recruit and disrupt. Innovation now represents over 10% of net sales in Mexico, Some examples are Don Julio Dos Baricas, which is made by aging Don Julio Repasado, in battles from the House of Buchanan, a great liquid ensuring we continue to innovate and recruit into the largest category SABO are Mexico, the flavor of Mexico and is aimed at recruiting from the value segment while bringing vibrancy to the Smernoff brand.
Early results are strong. It's gained 1.2 percentage points of category share in the 1st 3 months of national launch. Bells, which was launched to strengthen our position in Primary Scotch has gained 90 basis points of share in the Primary Scott segment since launch. Over the past few years, we've developed an advantaged route to consumer in Mexico and improved distribution and execution through geographic expansion to more cities, increasing called on account with additional sales headcount as well as improving call efficiency through clearer call objectives and measurement investing in automation of our sales processes to track and audit execution and through creating a small dedicated team focused on the tourism business and Third spaces. We have embedded productivity in the Mexican business to drive out costs to invest in growth.
This has resulted in savings being delivered across the 5 productivity work streams These savings have been partially invested to fund our Scotch and Reserve brand focus. I'm very pleased with the progress we made in Mexico. It is just one example of brilliant execution of our 6 priorities delivering our strategy. We will continue to focus on brilliant execution of the 6 priorities across our markets to drive consistent performance delivery. Before I move onto our 3 focus areas, let me share with you the progress we have made on our premium core beer brand Guinness.
Beer accounted for roughly 15% of Diageo's net sales in the half. And is the 2nd largest category for Diageo after scotch. Beer net sales grew 4% in the first half accelerating versus fiscal 2017 with Guinness, our flagship beer brand growing 4% with growth both in Africa and in our developed market footprint in Western Europe And North America. In our developed market footprint, We are reinforcing portfolio with beers from the brewers project. Guinness Draft Grew and gainshare in GB on premise in the first half.
We've seen tremendous success with Harpaz 13 Lager in GB and Ireland, Its strong growth and share gains in the Lager beer category continued in the first half. In the U. S, we are setting up the Guinness open gate brewery and barrel house in Maryland allowing consumers to taste new brews from Guinness. And we recently introduced Hauppau's 13 Lager in Canada. In Africa, We're driving physical availability by getting great quality Guinness in the right outlets at the right price served gold and visible.
We're driving consumer engagement through the successful made of Black campaign, which links the consumer interest in football and the English Premier League with the brand purpose. Outside these core markets we continue to partner with distributors for our Guinness business These markets grew 4%. Let me share with you some examples of our first half execution on Guinness. In GB, Guinness growth continued as we increased investment behind Guinness Draft with a focus on driving improved quality and visibility in the on premise and continued harpaz 13 Largo Momentum. We increased the reach of our ensuring great looking, great tasting Guinness Spines in more outlets.
Harpaws 13 Lager is now almost 8% of our Guinness business in GB and gained 40 basis points of Lager beer share in the half. In the U S, we started brewing our first beers at the test app room that opened at the new brewery. We also launched our Guinness 200th anniversary Exports Stout to mark the first shipments that went to the U. S. Back in 18 17.
In Africa, where we're activating against the Football occasion, Thierry Onree was the face of our football activation in Kenya and Nigeria in December. Our Facebook shout out reached almost 3,000,000 people and Guinness was the number one trending topic on Twitter in Kenya on the day of his visit. And Ethiopia following a successful trial, we launched Guinness Nationally in November to a strong response from consumers. Moving to our 3 focus areas, I am pleased with the continued growth in these three areas. Let me share with you what we're doing in each.
Starting with Scotch. We continued to build on momentum we had on Scotch in fiscal 2017 growing net sales 3%. This solid performance was delivered while working through headwinds in some of our markets. Momentum on Johnny Walker continued growing 7% with strong growth in all regions except Africa where performance was impacted by challenges within the third party distributor network in Cameroon. Johnny Walker Black Label grew 8% as we focused on painting the world, Johnny Walker Black, and solid growth in Johnny Walker Red Label And Reserve variants continued.
Buchanan's growth was slower in the first half in key regions, North America and Latin America and Caribbean. In the U S, where growth slowed as we cycled a strong depletion performance in the first half of last year. The brand is healthy and gained category share in combined Nielsen and Napka. In Latin America and Caribbean, performance was impacted due to challenging market conditions in the export channels in CCA, growth slowing in Colombia driven by recent tax increases and price increases in Mexico. Of our 3 biggest regions for Scotch Malls, we saw performance improve in the biggest region, Europe and Turkey, and continued growth in and travel retail was partially offset by weakness in the singleton due to commercial challenges in Taiwan.
Primary scotch momentum continued with strong growth on Black and white in Mexico and Brazil. Bells grew 3% with strong growth in Russia, Turkey, Thailand and Korea. Black Dog, our primary scotch in India was up 9%. Other scotch performance softened versus last year as all power declined due to recent tax increases in Colombia and continued declines on Windsor due to scotch category contraction in Korea and a consumer shift to the lower ABB non scotch variance from Windsor. Let me now share with you examples of our Johnnie Walker execution in the first half and what we're doing to tell in culture stories 5 Johnny Walker's Striding men's statues, along with human rights advocacy groups, strode in unity on Nelson Mandela Bridge in support of an abuse free society.
We continue to put liquid on lips at mentoring events formula 1 races and in the on premise, educating consumers on the heritage craftsmanship and taste of Johnny Walker variance and their versatility in mixed drinks. This was supported by the launch of Blenders batch Wyndcast Blend following the success of red dry finish and Triple Grain American Oak. We continued to activate Johnny Walker Blue Label and other variants in the gifting occasion with a focus on the holiday season, local festivals and travel retail channels. Johnny Walker Blue Label launched a ghost and rare special release crafted using irreplaceable whiskies from ghost distilleries that have long since closed together with other rare malts and grain scotch. Johnny Walker Black Label is the world's most revered blended scotch and this year we are reminding the world why.
We're reminding consumers that Johnnie Walker Black Label is made from more than 30 of the best single malt and grain whiskeys from the Four Corners of Scotland. It has aged for at least 12 years, expertly crafted by our small team of 12 blenders and is widely recognized by whiskey experts. Through a partnership with the film Blade Runner 2049, and Oscar nominated director, Dennis Villeneuve, we launched Johnny Walker Black Label, the Director's Cut, Across our key markets, we dialed up Johnny Walker Black Label Activation in the off premise and liquid on lips in the on premise and it was at the heart of our annual festive season gifting campaign. And in the US, we launched a new Johnny Walker Black Label campaign step right up. In China, the biggest spirits market globally penetration of international spirits and Scotch remains low.
The prospects for Scotch in China are bright with favorable demographics and rising incomes. Recent trends suggest that interest is increasing in the whisky category, which is largely scotch right now. Whiskey is the most preferred spirit among high net worth individuals, and this trend is accelerating. There's been a boom in whisky led bars nationwide with more than 300 bars in China now. Our 2nd whiskey summit in China generated a lot of interest with over 500 key trade customers, high net worth consumers, and media influencers attending.
We continue to invest in building the scotch category in China with a focus on super deluxe scotch. Where educating Chinese consumers on the taste profile, heritage and craftsmanship of Scotch with our Whiskey Academy Program and the Love Whiskey social media platform. We are expanding our whiskey boutiques These are high end off premise stores that educate and expose consumers to our entire Scotch portfolio. We're tapping into the interest in Prestige Scotch with our rare scotch molds and cask offerings. We're driving awareness of Johnny Walker Blue Label and the Singleton to access consumer interest in super deluxe blends and scotch molds.
Turning to U. S. Spirits, our 2nd focus area. At our Capital Markets Day in May, we shared with you how we've strengthened our understanding of consumer occasions as well as shifting demographics attitudes and behavior. We are utilizing these insights to participate in the right occasions with the right brands at the right price.
In fiscal 2018, we are continuing our focus on recruiting millennials and multicultural consumers while expanding it to ageless 50 plus consumers. Continuing purpose driven communications which we're activating locally at scale in fiscal 2018, stepping up our focus on the on premise and continuing to connect with consumers using what worked in fiscal 2017 with an up weight in marketing investment that we started in the second half of fiscal 2017. Net sales in the first half grew 3%. Growth was a bit slower in the first half lapping a strong first half innovation program in the prior year which included the launch of Crown Royal Vanilla. In the first half we started implementing our improved plans for our Super Premium Botkas, Sarrock and Ketel 1 Botker.
Excluding Sarrock and Ketel 1 Botker, net sales grew 5.5%. All key brands continued to gain category value share except in vodka. Crown Royal continued its share gains with growth of both the base variant Deluxe and Regal Apple accelerating versus fiscal 2017. However, overall growth slowed down as it cycled the launch of Crown Royal Vanilla in the first half of last year. Johnny Walker, Captain Morgan and Bailey's growth and category share gains continued.
Smurnoff depletion volume declined 1% brand equity scores improved as it continued to remind consumers that it's a quality vodka at a great price. Through a campaign involving celebrity influencers, new packaging and quality queues and local activation against multicultural consumers. Execution of improved plans on Sarac and Ketel 1 started in the first half and it will take time while momentum on Bullet continued. Castamigos, while not included in organic grew 70% in Nielsen and more than doubled in Napka in the first half. We have strong plans for the 2nd plans which have been driving improvement in brand equity and category share gains.
Let me share with you why we have come from that our plans on the core brands are working. The generosity platform is resonating and recruiting for Crown Royal, We've seen strong improvement in equity in the first half. Growth on Base variant Deluxe and Regal Apple has also accelerated in the first half versus last year. And we still have room to drive further trial and distribution for both Regal Apple and Vanilla and further expand our liquid credentials through the first of our Crown Royal Noble collection in the second half. The same is true for our other core brands.
We're seeing improvement in equity across Johnny Walker, Smernoff, Captain Morgan, and Bailey's as a result of our purpose driven communications and local activations. The up way to marketing against core brands will continue into the second half. In super premium vodka, we know we have more to do. Siroc Activation in the first half focused on its 3 core variants: blue, apple and peach, and the launch of the new flavor French vanilla. 2nd half plans continued the focus on the 3 core variants with digital and social media sampling and local events.
We'll also bring back Sarak Samakalada, which has introduced Sarak into the summer beach and pool occasions. We launched the Catalyosoda platform in the first half, reminding consumers that it's a family made vodka 100 percent non GMO and crafted to be exceptionally smooth. We will continue to build and continue to engage consumers at lifestyle events in key markets with the kettle market sampling mechanic which has been very well received by consumers. Reserve brands, excluding Sarrock and KetelONE, grew double digit in the first half, with Don Julio growth accelerating and continued strong growth on Bullet and Johnny Walker Reserve Barings. And there's a robust pipeline of exciting innovation launches planned in the second half, which you will hear about in the coming months.
These strong plans coupled with the robust innovation pipeline and continued up weight in marketing will set us up well in the U. S. In the second half. In India, net sales grew 2% in the first half, an improvement versus the second half of last year, which was broadly flat The highway ban impact has been reducing sequentially in the first half as outlets reopen or relocate and business has normalized at the end of the first half. Our strategic priority in India is to grow our Prestige and above brands which now represent almost 65% of our business.
Our Prestige and above brand performance improved in the first half growing 6%. Let me share some examples of Johnny Walker grew net sales 6% in the first half as we painted India Johnny Walker Black. Black Dog continued share gains in the primary Scott segment as we connected with consumers locally through events like Black Dog Easy evenings with Ax from acclaimed comedians. We continued the renovation of the power Prestige brands in the first half expanding the rolled out of antiquity with new packaging nationally. And we continue to leverage innovation to recruit consumers In the first half, we launched Black and white twelve year old scotch.
We rolled out Captain Morgan original rum nationally and towards our goal to improve operating margins, while navigating which went live on July 1, 2017. Gross margin improved by about 200 basis points in the first half as we mitigated the impact of inflation and additional steps to mitigate the GST impact including price increases and input rate negotiations with suppliers. In marketing, we focused on reducing non working spend and improved ROI using the marketing catalyst tool. Overheads reduced by 10% in the first half as we continue to implement 0 based budgeting and improve organization effectiveness. These productivity savings were partially reinvested to support re launches and increased scotch activation.
So good progress and we remain committed to delivering our medium term goal of improving organic operating margin to mid to high teens. Let me execution and accountable for performance. We are even more consumer centric using data and insights to inform our actions. We have a sharp focus on efficiency, which is allowing us to reinvest in our brands and deliver margin expansion This has enabled continued growth demonstrate continued positive momentum from This gives me the confidence that we are and 175 basis points of organic operating margin improvement in the 3 years ending fiscal 2019 and our performance ambition to be one of the best performing most trusted and respected consumer product companies in the world. Thank you.