Diageo Lowers Full-Year Outlook Amid Soft Sales in North America and China
Diageo PLC announced on Thursday a downward revision of its full-year guidance due to sluggish sales, primarily caused by weak performance in North America and China. The London-based company, known for brands such as Smirnoff vodka, Johnnie Walker whisky, and Guinness, reported a 2.2% decline in sales to USD 4.88 billion in the first quarter of its financial year, compared to USD 4.97 billion the previous year.
Sales Performance by Region
- On an organic basis, sales were flat, outperforming the market consensus forecast of a 1.3% decline.
- Organic volume grew by 2.9%, but this was nearly offset by a negative price/mix impact of 2.8%, mainly due to adverse mix effects in Asia Pacific.
- The weakness in Chinese white spirits significantly affected the Asia Pacific region, dragging down overall results.
- Organic net sales growth in Europe, Latin America & Caribbean, and Africa was canceled out by the soft sales in China and North America.
Impact of Chinese White Spirits and North American Market
Diageo estimated that the weakness in Chinese white spirits (CWS) reduced group net sales by approximately 2.5% during the quarter. In North America, the company faced challenging comparisons, including a prior-year restocking boost from the strong growth of Don Julio tequila.
Diageo noted, "Reflecting the CWS weakness and softer US environment, we have lowered financial 2026 expectations for organic net sales growth to 'flat to slightly down' from 'to be at a similar level to fiscal 25.'"
Recent Financial Results
In the fiscal year 2025, Diageo reported total sales of USD 20.25 billion.
"Organic volume growth of 2.9% was offset by negative price/mix of 2.8%, largely due to adverse mix in Asia Pacific caused by weaker results in Chinese white spirits," the company explained.
Summary: Diageo has cut its sales outlook due to setbacks in China’s white spirits market and a weaker North American environment, despite stable overall organic sales driven by other regions.
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