Diageo Lowers Full-Year Outlook Due to Soft North America and China Sales
Diageo PLC, the London-based owner of brands like Smirnoff vodka, Johnnie Walker whisky, and Guinness, lowered its full-year guidance on Thursday amid sluggish sales in North America and China.
Q1 Sales Performance
Sales fell 2.2% to USD 4.88 billion in the first quarter of the financial year, compared to USD 4.97 billion in the previous year. On an organic basis, sales remained flat, outperforming the market consensus expectation of a 1.3% decline.
Volume and Price Mix Impact
- Organic volume growth was 2.9%.
- This was offset by a negative price/mix impact of 2.8%, mainly caused by weaker demand for Chinese white spirits (CWS) in Asia Pacific.
- Excluding the China impact, price/mix would have been mostly stable.
Regional Performance
Organic net sales growth in Europe, Latin America & Caribbean, and Africa was offset by weak results in Asia Pacific due to Chinese white spirits and softer sales in North America caused by low consumer confidence.
“Weakness in Chinese white spirits negatively impacted group net sales by around 2.5% in the quarter,” Diageo estimated.
In North America, the company noted challenging comparisons, including the previous year's tequila restocking boost from strong Don Julio tequila growth in the first quarter.
Updated Financial Guidance
Due to these challenges, Diageo reduced its financial 2026 organic net sales growth forecast to “flat to slightly down,” changing from an earlier outlook of “similar level to fiscal 25.”
For financial 2025, Diageo reported total sales of USD 20.25 billion.
Author’s Summary
Diageo trimmed its sales outlook after weak market demand in North America and China, driven mainly by poor performance in Chinese white spirits and softer consumer confidence in the US.