Diageo Cuts Outlook Amid Weak North America and China Performance
Diageo PLC reduced its full-year guidance on Thursday due to slower sales, mainly impacted by weaker demand in North America and China. The London-based beverage company, known for brands such as Smirnoff, Johnnie Walker, and Guinness, reported a 2.2% decline in first-quarter sales to USD 4.88 billion, down from USD 4.97 billion a year earlier.
On an organic basis, sales remained flat, which performed better than the 1.3% drop anticipated by market analysts. The company noted that an organic volume increase of 2.9% was offset by a negative price and mix effect of 2.8%, largely driven by weaker results in Chinese white spirits across the Asia-Pacific region. Without this factor, the price/mix metric would have remained roughly unchanged.
Regional Performance
Growth in Europe, Latin America & the Caribbean, and Africa was counterbalanced by soft demand in Asia Pacific, where Chinese white spirits underperformed. North American sales also eased due to subdued consumer confidence and challenging comparisons following strong tequila restocking in the prior year.
“Weakness in Chinese white spirits negatively impacted group net sales by around 2.5% in the quarter,”
the company estimated.
Guidance Update
Taking into account the performance in China and North America, Diageo revised its financial 2026 outlook for organic net sales growth to be “flat to slightly down,” compared with the previous expectation of maintaining similar growth levels to fiscal 2025. The company had reported total sales of USD 20.25 billion for fiscal 2025.
Author’s Summary
Diageo's earnings are being pressured by weak North American demand and a sharp downturn in Chinese white spirits, prompting the firm to trim its 2026 sales outlook.