Diageo Lowers Full-Year Guidance Amid Weak North America and China Sales
Diageo PLC announced on Thursday a reduction in its full-year forecast due to sluggish sales influenced by weak demand in North America and China. The London-based company, known for brands like Smirnoff vodka, Johnnie Walker whisky, and Guinness, reported a 2.2% decline in sales for the first quarter of its financial year, falling to USD 4.88 billion from USD 4.97 billion in the same period last year.
Sales Performances and Market Dynamics
- On an organic basis, sales remained flat, outperforming the market consensus which predicted a 1.3% drop.
- Organic volume grew by 2.9%, but this was nearly offset by a negative price and mix effect of 2.8%, mainly due to unfavorable product mix in Asia Pacific driven by weak Chinese white spirits sales.
- Excluding the Chinese white spirits segment, price and mix effects were relatively stable.
Regional Highlights
Organic net sales increased in Europe, Latin America & Caribbean, and Africa, but this was balanced out by weaker results in Asia Pacific and North America:
- China’s white spirits market decline affected Asia Pacific results, dragging group net sales down by approximately 2.5% in the quarter.
- In North America, challenging year-over-year comparisons included a strong first quarter last year due to tequila restocking, particularly with Don Julio tequila.
Revised Outlook
Reflecting the ongoing weakness in Chinese white spirits and softer conditions in the US market, Diageo adjusted its financial outlook for 2026. The company now expects organic net sales growth to be "flat to slightly down," revised from the previous forecast of maintaining a similar level to fiscal 2025.
“We estimate the weakness in Chinese white spirits negatively impacted group net sales by around 2.5% in the quarter.”
In fiscal 2025, Diageo reported total sales of USD 20.25 billion.
Author's Summary
Diageo reduced its 2026 sales outlook as strong performance in other regions was offset by weak demand for Chinese white spirits and softer North American consumer activity.
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