Diageo Lowers Full-Year Outlook Amid Weak Sales
Diageo PLC announced on Thursday a reduction in its full-year guidance due to sluggish sales affected by poor 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 for the first quarter of its financial year, compared to USD 4.97 billion the previous year.
Sales Performance and Market Impact
On an organic basis, Diageo's sales remained flat, outperforming the market consensus which predicted a 1.3% decrease. Organic volume growth increased by 2.9%, but this was offset by a negative price and mix effect of 2.8%, primarily influenced by a weaker product mix in Asia Pacific due to disappointing results in Chinese white spirits.
Excluding the adverse mix in Asia Pacific, the company’s price/mix would have remained mostly stable. Organic net sales growth in Europe, Latin America & Caribbean, and Africa was balanced by the softness in Chinese white spirits and weaker consumer confidence in North America.
Diageo estimated that the weakness in Chinese white spirits negatively impacted group net sales by approximately 2.5% in the quarter.
North America and Financial Outlook
In North America, Diageo faced challenging comparisons, including strong Don Julio tequila growth and tequila restocking in the same quarter a year ago. Due to the weak Chinese white spirits and a softer U.S. market environment, the company adjusted its financial 2026 forecast for organic net sales growth to "flat to slightly down," revised from “to be at a similar level to fiscal 25.”
For financial year 2025, Diageo reported total sales of USD 20.25 billion.
Author’s Summary
Diageo trims its 2026 sales outlook following flat organic growth and weak demand in North America and China, signaling challenges ahead despite solid volume gains.