Diageo cuts sales and profit forecast amid weak demand in US, China
The maker of Guinness and Johnnie Walker lowers its sales and profit outlook as consumer demand slows in key markets.
UK – Global alcoholic beverage producer Diageo has revised its sales and profit forecasts downward, citing weaker consumer demand in the United States and China, its two largest markets.
The company, which produces Guinness stout and Johnnie Walker whisky, now expects organic sales growth to be “flat to slightly down” for the fiscal year ending July 2026. This marks a shift from its previous projection of flat growth.
Diageo attributed the outlook revision to sluggish spirit demand in China and a weaker-than-expected US consumer environment. The maker of Don Julio tequila also lowered its annual organic profit growth forecast to a low to mid-single-digit range, from its earlier mid-single-digit target.
Interim Chief Executive Nik Jhangiani described the company’s performance as disappointing following the first-quarter trading update. “There’s much more for us to do, and we need to go faster,” he said, emphasizing the company’s focus on improving execution and efficiency.
The update comes as Diageo seeks to cut costs and streamline operations amid broader industry challenges, including cooling post-pandemic demand, global trade tariffs, and shifting consumer preferences toward moderation and non-alcoholic options.
Diageo has faced ongoing turbulence since the sudden passing of former CEO Ivan Menezes in 2023, which led to Debra Crew’s short-lived tenure as chief executive. Crew’s term ended abruptly in July 2024, just months after a surprise profit warning linked to steep sales declines in Latin America.
Jhangiani, formerly the company’s Chief Financial Officer, assumed leadership on an interim basis, with no permanent successor yet announced.
Despite the revised outlook, first-quarter results were slightly better than expected, with net sales falling 2.2% to US$4.9 billion in the three months ending September 30. US spirit sales declined 4.1%, largely due to high tequila sales in the prior year, while Asia-Pacific organic sales fell 7.5%, driven by weaker demand in China.
Conversely, Africa delivered strong results, with organic sales up 8.9%, led by growth in East Africa and solid performance across South, West, and Central Africa. In Europe, Guinness remained a key growth driver, recording high single-digit sales growth supported by rising demand for its alcohol-free variant.
Jhangiani reaffirmed Diageo’s commitment to adapting quickly to market conditions. “We are focused on what we can control—acting with speed to drive efficiencies, prioritising investment, and responding to evolving consumer trends,” he said.
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