Diageo cuts outlook amid weak performance in North America and China
Diageo PLC reduced its full-year forecast on Thursday after reporting slower sales, affected by weak results in North America and China. The London-based beverage giant, known for Smirnoff, Johnnie Walker, and Guinness, recorded a 2.2% decline in sales to USD 4.88 billion during the first quarter, down from USD 4.97 billion in the same period last year.
On an organic basis, sales remained stable, performing better than the 1.3% decline expected by analysts. Organic volume rose 2.9%, but price and mix effects fell 2.8%, mainly due to slower results in Chinese white spirits, which weakened the Asia Pacific performance. Excluding China, price and mix would have been nearly unchanged.
Regional performance
- Europe, Latin America & Caribbean, Africa: Organic net sales growth remained positive in these regions.
- Asia Pacific: Results were dragged down by the weak performance of Chinese white spirits.
- North America: Softer results reflected lower consumer confidence and difficult comparisons due to strong tequila growth last year.
Diageo estimated that the weakness in Chinese white spirits reduced group net sales by approximately 2.5% during the quarter. The company noted that in the U.S. market, last year's exceptional Don Julio tequila restocking made comparisons tougher this year.
“Reflecting the CWS weakness and softer US environment, Diageo lowered financial 2026 expectations for organic net sales growth to ‘flat to slightly down’ from ‘to be at a similar level to fiscal 25.’”
In the previous financial year (2025), Diageo posted total sales of USD 20.25 billion.
Author’s summary
Diageo’s latest results reveal stable overall performance despite setbacks in North America and China, prompting a reduced growth forecast for 2026.