Diageo Lowers Full-Year Forecasts
Drinks producer Diageo has cut its full-year sales and profit forecasts due to declining demand for Chinese white spirits and slower consumer spending in North America. The company now anticipates its 2026 organic net sales to remain flat or slightly decrease.
According to Diageo, the forecast includes the negative effects of weaker Chinese white spirits sales and a softer-than-expected US consumer market. Organic operating profit growth is projected to reach only low-to-mid single digits.
Quarterly Performance
For the first quarter, the company reported flat organic net sales. Organic volume increased by 2.9%, but this was offset by a negative price and mix shift of 2.8%, mainly caused by weaker results for Chinese white spirits in Asia-Pacific. Without this factor, price and mix would have remained stable.
Management Perspective
“Net sales were flat organically in Q1, with growth in Europe, LAC, and Africa offset by weakness in Chinese white spirits and a softer US consumer environment than planned for,” said interim chief executive Nik Jhangiani.
“We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritising investment and adapting more quickly to an evolving consumer environment.”
“We are well advanced in sharpening our strategy, and we are developing and already implementing clear plans to drive growth across the broader portfolio, ensuring that we meet relevant consumer occasions of the future.”
Author’s Summary
Diageo faces steady sales and limited profit growth amid weak Chinese demand and US spending slowdown, pushing leadership to refocus strategy and improve efficiency.