Diageo Cuts Outlook Amid Weak North America and China Sales
Diageo PLC reduced its full-year outlook on Thursday as sluggish demand in North America and weak performance in China dragged down results. The London-based beverage giant, known for brands such as Smirnoff, Johnnie Walker, and Guinness, reported a decline in sales to USD 4.88 billion for the first quarter of its fiscal year, compared with USD 4.97 billion a year earlier—a 2.2% drop.
On an organic basis, sales remained steady, surpassing the market forecast for a 1.3% decline. The company explained that organic volume growth of 2.9% was offset by a negative price/mix of 2.8%, mainly due to weaker demand for Chinese white spirits within its Asia Pacific portfolio. Without this regional drag, price/mix would have stayed roughly unchanged.
Regional Performance Overview
- Europe, Latin America & Caribbean, and Africa showed moderate organic net sales growth.
- Asia Pacific results were held back by the slump in Chinese white spirits.
- North America’s softer results reflected lower consumer confidence and tough comparisons after last year’s strong tequila restocking, particularly for Don Julio.
Diageo estimated that the weakness in Chinese white spirits reduced overall group net sales by about 2.5% during the quarter.
Updated Financial Outlook
“Reflecting the CWS weakness and softer U.S. 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 fiscal 2025, Diageo had reported sales of USD 20.25 billion.
Author’s Summary
Diageo has revised its growth expectations downward as weak Chinese white spirits and sluggish North American demand curb the momentum of global sales recovery.