Good morning everyone. Thank you for joining us. I'm pleased to share that in the first half of fiscal 2023 we delivered organic top line and operating profit growth ahead of our medium-term guidance. This continues our track record of being a quality growth compounder. We're driving consistent top line performance and delivering operating margin expansion while reinvesting smartly in our brands, fueled by productivity savings. Our business is 36% bigger on a constant basis than pre-COVID. Total beverage alcohol remains an attractive, growing, and resilient market. Spirits continue to gain share. Premiumization is continuing. We are seeing resilience in the consumer. We have a diversified footprint and an advantage portfolio that is driving quality market share gains. We believe that our core capabilities across brand building, digital, supply chain, and culture are a competitive advantage.
They support delivery of quality, sustainable growth, our strong track record in ESG, and everyday efficiency. I will begin with an overview of our first half performance before Lavanya reviews our financial results in more detail. In the first half of fiscal 2023, our top line grew by over 9%. I am pleased with our momentum as we exited the period in December and our start in January. Volume grew 2% in the first half. Even as we implemented strategic price increases, we expanded operating margin despite inflationary pressure, invested for growth, drove premiumization, and delivered productivity savings. Our free cash flow declined year-over-year, primarily due to lapping a higher level of creditor increases than the prior year, and phasing of spend in the first half of fiscal 2023.
As Lavanya will discuss in more detail, we expect free cash flow to accelerate in the second half of the fiscal. We are again increasing our dividend up 5% this half, maintaining our track record of increases since Diageo's creation 25 years ago. Our performance in the first half of fiscal 2023 demonstrates our advantage portfolio and broad geographic footprint in action. North America grew organic net sales value 3% with strong price growth and mix. As anticipated, the U.S. spirits category growth is normalizing, trending towards the historical mid-single digit range. We continue to see the long-term trends of spirits gaining share of TBA, premiumization is sustaining. 33% of American drinkers surveyed said they have spent $50 or more on a bottle of alcohol in 2022. That's up from 24% in 2021.
We continue to increase ANP investment this half on top of significantly upweighting ANP investment over the last four years, driving stronger brand equity across the portfolio. We are holding share of TBA. In U.S. spirits, depletions value grew ahead of our shipments. Crown Royal, our largest U.S. brand, continued to lead the Canadian whisky category and has increased depletions, supported by sustained investment, our strong brand-building capabilities, and iconic partnerships such as with the NFL. In Europe, we grew organic net sales 10%. Consumer demand was resilient despite the challenging economic environment. In Latin America, for the fourth consecutive half, net sales grew double digit, driven by continued price increases, ongoing portfolio premiumization, and volume growth. I am very proud of our performance in Latin America. Winning quality market share remains a key focus.
With the easing of COVID-19 disruptions and normalization of the on-trade, we are measuring our market share performance in the on and off trade. I'm pleased to say in the first half of fiscal 2023, we gained or held share in 75% of total Net Sales Value, driven by our strong portfolio and strong execution. The long-term trend of premiumization in TBA continues. Our leading portfolio of super premium plus brands drove double-digit growth in every region in the first half of fiscal 2023, and have doubled Net Sales Value since the first half of fiscal 2019. Tequila and Scotch performance was particularly strong. We use our consumer insights to identify acquisition opportunities in fast-growing premium segments. 10 of the brands we have acquired since fiscal 2017 are in the super premium plus price tier.
Casamigos in the recent half delivered net sales 11 times larger than its annual sales at acquisition. In the first half of fiscal 2023, we acquired Mr. Black, the Australian premium cold brew coffee liqueur, and Balcones Distilling, a Texas craft distiller and leading producer of American single malt whiskey. We've just announced our intent to acquire Don Papa Rum. From the Philippines, one of the fastest growing brands in the fast-growing super premium segment of the rum category. We are equally disciplined about disposing assets that offer lower long-term growth potential. In this half, we agreed to dispose of our brewery in Cameroon, and we completed the sale of Archers. We also completed the franchising and disposal of a portfolio of brands in India. We have significantly increased our A&P investment and continue to transform its effectiveness through combining our creative flair with stronger data analytics and tools.
We continue to use Catalyst to optimize investment choices across our portfolio and marketing channels. Sensor, first deployed in the U.S., enables us to optimize investment within marketing channels. In the U.S., we have trebled our return on investment for Don Julio by optimizing our publisher mix. We recently launched this in Great Britain and Ireland with further rollouts planned this year. CreativeX, our latest tool, enables us to assess the effectiveness of our content before deployment based on the unique algorithms of each digital platform to ensure we can provide the perfect serve of advertising content to consumers. This drives further efficiency and ensures our content is perfectly optimized to deliver engagement. It's now deployed in markets covering 75% of our NSV. In Great Britain, CreativeX helped us reduce the cost per thousand views of digital content by 50%.
Our world-class brand building is driving strong performance. We continue to upweight A&P investment behind Johnnie Walker, Diageo's largest brand, which grew net sales by 21% in the first half of fiscal 2023, on top of strong growth in the prior year. Performance was exceptionally strong in global travel, supported by luxury activations in key airports, including Singapore, Dubai, and Seoul, as tourism and travel recovers. Our tequila portfolio continues its double-digit growth trajectory, with net sales growing 28%. In the U.S., Don Julio and Casamigos gained 39 basis points of total spirit share in the first half of fiscal 2023. I'm pleased that Don Julio has been named the best-selling and top trending tequila in the 2023 Drinks International Brands Report. Guinness once again grew double digit, up 17%, with strong growth in Europe and North America.
In Ireland, the brand's strong performance was supported by our Lovely Day for a Guinness campaign, which disrupted long-standing consumer perceptions of the brand by placing a pint of Guinness front of mind for celebrations during the summer heatwave. I'm thrilled as we close the half that Guinness hit the number one beer spot in the on-trade in Great Britain. We are continuing to make good progress against our Society 2030: Spirit of Progress ESG action plan. As part of our commitment to reach one billion people with dedicated responsible drinking messages by 2030, we launched Drops of Advice, a global campaign promoted by Smirnoff and Diageo during the recent festive period. We are committed to creating an inclusive and diverse culture. In partnership with Disability:IN, we are working to improve accessibility both digitally and physically in the workplace, alongside a voluntary rollout of disability disclosure.
We continue our work to overcome stereotypes via our brand campaigns, such as with our recent Guinness campaign, Brothers, which features a blind actor and reinforces the importance of inclusivity. Increasing supply chain resilience is imperative for dealing with unprecedented volatility. In December, together with Encirc, a leading glass manufacturer, we announced plans to create the world's first hydrogen-powered furnace to manufacture net zero glass bottles at scale, producing up to 200 million bottles a year by 2030. This furnace, which will be operational in 2027, is expected to reduce carbon emissions by 90% and forms part of our ambition to halve our Scope three carbon emissions by 2030. In February 2023, we expect to complete the remaining £ 300 million of our current program to return up to £ 4.5 billion of capital to shareholders.
Today, I'm pleased to announce that we expect to return up to an additional half a billion pounds by the end of fiscal 2023. Now I'll hand over to Lavanya to take you through more of the detail on our financial results.
Thank you, Ivan, and good morning, everyone. As Ivan mentioned, we have delivered another strong set of results in the first half of fiscal 2023. We grew organic net sales by 9.4%, with volume growth of 1.8% and strong price mix performance. We leveraged our diversified footprint, advantage portfolio, strong brands, and the ability to adapt quickly to drive growth in a volatile environment. We expanded organic operating margin by nine bips, reflecting a disciplined business model despite headwinds from cost inflation. We generated free cash flow of £ 0.8 billion. A positive impact of operating profit and foreign exchange on free cash flow was offset by a higher year-on-year working capital outflow and higher tax. Pre-exceptional earnings per share increased 15%, and basic EPS increased 20%.
We increased our interim dividend by 5%, reflecting our continued strong performance and our commitment to a progressive dividend policy. Return on invested capital was 19.7%, up 37 basis points. Total shareholder return for the six-month period was 5%, in the top half of our peer group. Our profitable growth algorithm continues to deliver sustainable long-term growth. We are premiumizing our portfolio, increasing prices, and driving productivity, whilst driving volume growth, all of which enables us to invest smartly in the long term. Price mix growth was 7.6 percentage points, reflecting price increases taken by all regions. Price contribution to NSV growth was in the high single digits. We unlocked a further £ 220 million of productivity savings across COGS, marketing, and overheads.
Strong top-line performance, combined with our culture of everyday efficiency, enabled us to continue to reinvest in our brands and core capabilities. We increased marketing investment by nearly £ 100 million. We grew organic net sales across all five regions in the first half of fiscal 2023, despite lapping strong double-digit growth. Looking across our business, we have delivered a four year net sales CAGR of 8% with a 3% volume CAGR. Organic net sales in North America grew 3%, lapping strong double-digit growth in the first half of fiscal 2022. Depletions grew one percentage point ahead of shipments. In Europe, all markets grew, except Eastern Europe, which was impacted by the winding down of our operations in Russia. Growth was driven by premiumization and targeted price increases while holding volumes. Asia Pacific grew 17% despite Greater China, which only grew 2%.
Growth in Greater China was driven by Scotch whisky, which grew 20% and more than offset the decline in Chinese white spirits. Southeast Asia, travel retail, and India all posted strong growth, mainly from Scotch. Latin America and Caribbean grew sales 20%. This is now the highest margin region across our business, primarily driven by price increases, premiumization, and volume growth of six percentage points. In Africa, we delivered growth across all markets, supported by price increases. In the first half of fiscal 2023, we delivered growth across most categories, led by Scotch, tequila, and beer. Our Scotch business is nearly 40% bigger in the first half of fiscal 2023 than in the same period in fiscal 2019. Our tequila business is more than four times as large. This has been fueled by a 10% compounded annual growth rate of our A&P investment.
We delivered a 19% growth of Scotch, which contributed to more than 50% of Diageo's net sales growth. Premium plus Scotch grew 21%, and our global icon, Johnnie Walker, also grew 21%. Tequila contributed 27% of Diageo's net sales growth and grew 28%, with strong growth across the portfolio, despite some continued liquid constraints on our Añejo and Reposado aged variants of Don Julio. We drove beer growth of 9%, and Guinness was up 17%, with strong growth in Ireland, Great Britain, North America, Asia Pacific, and Africa. In other whisky, IMFL whisky grew 13%, driven by Royal Challenge. Bulleit recovered from glass supply constraints, growing double digits in North America, and Windsor benefited from the reopening of the on-trade in Korea, also growing double digits.
This growth was partially offset by a decline in Crown Royal in North America, where sales declined by 8% as it lapped the replenishment of stock levels by distributors in the first half of last year. Crown Royal depletions were in growth in the first half of fiscal 2023. Sales of Chinese white spirits were adversely impacted by COVID-related restrictions, as it is mostly consumed in the on-trade. Looking forward, we believe our capabilities should enable us to accelerate growth as restrictions ease. Our premium plus brands continued to be a significant driver of performance, contributing 65% of organic net sales growth, with strong growth in Scotch, tequila, and Guinness. Our premium plus brands now account for 57% of Diageo's net sales, up five percentage points from fiscal 2019.
Our super premium plus brands, which contributed 28% of net sales, grew 12% and delivered over a third of organic net sales growth. This reflects strong growth of Don Julio and Casamigos, the higher marks of Johnnie Walker, Lagavulin, and The Singleton. Our premium brands grew 9% with strong performance by Johnnie Walker Black Label and Guinness. We continue to strengthen our revenue growth management, or RGM, capabilities, which are key in driving further positive price mix and balanced sustainable growth across volume, price, and mix. In Southern Europe, our targeted A&P investments significantly grew Johnnie Walker's market share. We leveraged Catalyst to reprioritize investment in brands and markets with the highest potential, focusing on where there has been a strong recovery in the on-trade and premiumization trends within Johnnie Walker.
We implemented low double-digit price increases across the Johnnie Walker portfolio and increased marketing investment by 18%. Those choices contributed to Johnnie Walker growing 37% in the half, driven by strong volume growth of 23% and price mix of 13%. We won almost 200 basis points of share in international whiskey and grew gross margins by over 300 basis points. In Mexico, we made the right investment choices across Don Julio products, fueling performance with increased marketing investment of 22% compared to the same period in fiscal 2022, while taking strong double-digit price increases and successfully gaining share. These choices contributed to Don Julio net sales growing 60% in the half, driven by strong volume growth of 33% and price mix of 27%. This delivered market share gains and strong gross margin expansion of over 800 basis points.
Our culture of everyday efficiency and a strong pipeline of productivity initiatives play an important role in reducing the impact of cost inflation and enabling us to continue to invest in our business. We drove around £ 220 million of productivity savings in the first half of fiscal 2023, delivering approximately 600 million cumulatively of the £1.2 billion fiscal 2022-fiscal 2024 commitment that I had set out at our Capital Markets Day in 2021. We are on track to achieve this goal. Against a backdrop of continued inflationary pressure, we have leveraged supply relationship management and strategic sourcing initiatives to deliver COGS productivity savings. We also continue to drive savings through waste reduction, supply efficiency improvement, and automation.
We also continue to drive benefits from the changes we made to our sourcing strategy for tequila in Mexico to reduce the cost of our tequila liquid. Marketing effectiveness also contributed to delivering benefits in the half. We are driving media pricing efficiency through increased scale of our investment and, as Ivan explained earlier, through our digital tools like CreativeX, where we are delivering more effective content to consumers in a more cost-effective way. We increased marketing investment across all regions, particularly in Asia-Pacific and Latin America and Caribbean. Our reinvestment rate was 17%, broadly in line with the prior half, which reflects our consistent strong investment in our brands. We delivered consistent organic operating margin despite increased cost inflation pressures in the half. We fully offset the absolute value of COGS inflation and partially offset the negative impact on gross margin through pricing and productivity.
We faced significant cost pressure in the half, particularly in glass, ocean freight, and other transportation costs, much of which was due to significant energy cost inflation. Additionally, packaging costs were also higher versus the first half of fiscal 2022. While pricing is a lever we can deploy to help mitigate the impact of inflation, it's not the only option we have. With increased marketing investment, we continue to build strong brand equity, which alongside RGM, enables us to agree on increased prices with our customers while driving volume growth, premiumization, and productivity. In the second half of fiscal 2023, we expect cost inflation pressure to persist, and we remain committed to investing in our brands to deliver sustainable growth. Although we are investing more in our brands, a marginal reduction in our reinvestment rate due to phasing had a broadly positive impact on operating margin for the half.
For the second half, we expect to increase A&P investment ahead of sales growth. Reported operating profit before exceptional items increased 16.4%, and our reported operating margin before exceptional items was down 57 basis points. Organic operating margin increased nine basis points. Free cash flow decreased as strong growth in operating profit and a favorable foreign exchange impact was more than offset by a higher year-on-year working capital outflow, higher cash tax and interest paid, and increased capital investment. The higher year-on-year working capital outflow was due to the normalization of creditors relative to the first half of fiscal 2022, as our growth rate began to moderate in the first half of fiscal 2023. Creditors increased significantly in the first half of fiscal 2022 due to accelerated growth as markets recovered. Working capital has also been impacted by the phasing of spend in the half.
We increased our investment in inventory, including maturing stock, to deliver supply chain resilience and to support the future growth of the business. The additional cash tax payments were the result of increased profit, higher balancing payments, and adverse foreign exchange movements impacting tax liabilities. Higher interest costs reflects the higher interest rate environment globally. In fiscal 2023, I continue to expect CapEx for the year to be in the range of £1 billion-£ 1.2 billion, including investment in production capacity for our strategic categories, our digital capabilities, our ambitious sustainability agenda, and our supply chain agility program. I expect free cash flow to accelerate in the second half of fiscal 2023 as we lap more normalized working capital movements in the second half of fiscal 2022.
Our leverage ratio of 2.5 times remains at the low end of our target range as a result of our strong profit performance. Closing and average net debt increased year-over-year by GBP 2.8 billion and GBP 2.5 billion respectively, primarily due to the acceleration of our return of capital program since fiscal 2022. Our net finance charges increased by GBP 112 million, primarily due to the higher interest rate environment, which also contributes to higher losses on our foreign exchange swap portfolio. Our effective interest rate was 3.8%, an increase of 1.2 percentage points above fiscal 2022, and slightly higher than our original guidance of around 3.5%. This has been primarily driven by an increase in interest rates relative to prior expectations and changes in foreign exchange rates.
Looking ahead, I expect our effective interest rate for fiscal 2023 to be around 4%, primarily reflecting the movement we see in interest rates. We remain committed to a leverage ratio of 2.5 times to three times adjusted net debt to EBITDA, although we expect to continue to be at the lower end of our range in the near term given the ongoing economic uncertainty. Our consistent and disciplined approach to capital allocation is unchanged. Our priority is to invest in sustainable organic growth and to acquire strategic brands that strengthen our exposure to fast-growing categories. Today, we announced an interim dividend of 30.83 pence per share, a 5% increase on our interim dividend in fiscal 2022. This is in line with the growth rate of our interim and final dividend in fiscal 2022.
Our dividend cover strengthened to 2.1 times in the first half of fiscal 2023. When we have excess cash, we expect to return it to shareholders. As of 31st December 2022, we had completed approximately £ 4.2 billion of our current program to return up to £ 4.5 billion of capital to shareholders. We expect to complete the remaining circa £ 0.3 billion of the program during February 2023, earlier than anticipated. As a result of our continued commitment to returning excess capital to shareholders and our confidence in Diageo's future performance, today we announced that we expect to undertake up to an additional half a billion pounds of share buyback program to be completed before the end of fiscal 2023. Moving on to foreign exchange.
Favorable foreign exchange movements positively impacted both net sales and operating profit in the first half of fiscal 23. As a large proportion of our income and profit is generated in US dollars, the positive translation impact in the half was mainly driven by the sterling weakening against the US dollar. Transactional FX had no material impact on half year operating profit. The weakening of sterling against most currencies and our net gain on foreign exchange hedges was offset by exchange losses, predominantly relating to African currencies. We hedge our transactional foreign exchange on a rolling basis for our major currency exposures. This strategy results in foreign exchange rates that reflect the average of our hedging positions built over time. Despite market foreign exchange volatility during the half, our average transactional exchange rates on our hedged currency exposures were closely aligned to the same period in the prior year.
We are not providing specific guidance in relation to foreign exchange for the fiscal 23. Taking spot exchange rates from December 31st, 2022 of £1 -$1.2 and £1 -€ 1.13, where the sterling has depreciated compared to the actual exchange rates experienced in fiscal 22, and applying them to last year's P&L profile for net sales and operating profit, we would see positive exchange impacts of approximately £ 950 billion and £ 300 million, respectively. I expect an unfavorable impact related to hyperinflationary economies, primarily in Turkey. Earnings per share before exceptional items increased 15% from 85.6 cents to 98.6 cents, driven by organic operating profit and foreign exchange movements.
Our tax rate before exceptional items was 23.4%, an increase of 0.4% over fiscal 2022, with profit mix being the primary driver of that movement. This was within our guidance range of 22%-24%, which we are maintaining for fiscal 2023. Our finance charges were impacted by the higher interest rate environment. I am encouraged by our performance in the first half of fiscal 2023, with a strong set of results despite ongoing global economic volatility and continued inflationary pressure. Our diversified portfolio and profitable growth algorithm continue to deliver sustainable top-line growth, our consistent productivity savings enables us to smartly reinvest in our brands. We have responded rapidly to an evolving environment, we will continue to use our world-class analytics and our RGM tools to make the right pricing interventions and marketing investments to deliver our long-term ambition.
As Ivan highlighted, the environment will continue to be challenging for the rest of fiscal 23 and beyond. We will continue to closely monitor consumer trends across our markets to respond quickly to potential shifts, including those from weakening consumer spending power. I am confident that by using our strategic levers, tools, and capabilities, we are well positioned to deliver our medium term guidance of consistent organic net sales growth in the range of 5%-7%, and sustainable organic operating profit growth in the range of 6%-9% for fiscal 23 to fiscal 25. Now back to you, Ivan.
Thank you, Lavanya. In summary, TBA remains an attractive, growing, and resilient market. Spirits continue to gain share, premiumization is continuing, and we're seeing resilience in the consumer. We have a diversified footprint. Our advantage portfolio, which we continue to actively shape, is driving quality market share gains. We believe our core capabilities across brand building, digital, supply chain, and our culture of everyday efficiency are a competitive advantage. We're investing to support delivery of sustainable long-term growth and our strong track record in ESG. Finally, we are confident in our strategy and our ability to deliver sustainable long-term growth and shareholder value. Thank you.