Diageo Lowers Guidance Citing Decline in China Spirit Sales
Diageo has revised its fiscal 2026 outlook due to weaker spirit sales in China and a softer U.S. consumer market. The company expects organic net sales growth for the year to be flat or slightly down, with organic operating profit growth projected in the low to mid-single digits.
Fiscal 2026 Outlook Adjustments
- Organic net sales growth forecast changed from a similar level to fiscal 2025 to flat or slightly negative.
- Fiscal 2025 organic net sales had a 1.7% increase from the previous year.
- Organic operating profit growth target reduced from mid-single digits to low to mid-single digits.
First Quarter 2026 Financial Results
For the quarter ending September 30, 2025, Diageo, known for brands like Smirnoff, Guinness, and Bailey's, reported:
- A 2.2% decline in reported net sales, totaling $4.9 billion.
- Organic volume growth of 2.9%, offset by a negative price/mix impact of 2.8%.
- A consumer environment weaker than anticipated.
- Softer demand specifically within the Chinese white spirits category.
“The consumer environment was weaker than expected, and we faced softer sales in the Chinese white spirits category.”
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Author’s summary: Diageo has downgraded its fiscal 2026 forecasts due to subdued consumer demand in China and the U.S., impacting its sales growth and profit expectations.