Diageo projects US$150M tariff hit amid U.S. import duties 

UK – Johnnie Walker owner Diageo is anticipating an unmitigated impact of US$150 million on its business due to the 10% tariff imposed by U.S. President Donald Trump on imports from the UK and Europe.  

The global spirits giant stated that it expects to offset around half of this effect on its operating profit through a series of actions already underway. 

“We expect that given the actions that we have in place already, before any pricing, we will be able to mitigate around half of this impact on operating profit on an ongoing basis,” the company said in a trading update. It added that further measures would be pursued to minimise the tariff burden. 

Earlier this year, Diageo outlined its strategy to manage the implications of the tariffs through pricing and promotional adjustments, inventory and supply chain management, and reallocation of investments. These initiatives are designed to reduce disruption and maintain operational stability in its key markets, particularly the U.S. 

Simultaneously, Diageo announced the launch of the first phase of its new Accelerate programme, aimed at generating US$3 billion in annual cash flow from fiscal year 2026. 

The programme is focused on increasing operational agility and efficiency through a global operating model supported by digital and data capabilities. 

Diageo anticipates that the Accelerate scheme will lead to cost savings of approximately US$500 million over the next three years. These savings are expected to be reinvested into future growth opportunities and will support improved operating leverage across the business. 

Chief Executive Officer Debra Crew stated, “It will strengthen Diageo by increasing our effectiveness, agility, and resilience. It will also ensure that we are well-positioned to deliver sustainable, consistent performance while maximizing shareholder returns, even if current trading conditions persist.” 

Additional information on the Accelerate programme’s implementation and impact is scheduled to be released during the company’s full-year financial results in August. 

Q1 2025 financial results 

The announcement was made alongside Diageo’s trading update for the third quarter ending March.  

Net sales during the period rose by 2.9% to £4.38 billion (US$4.9B), with organic sales growth reaching 5.9%, supported by favourable sales phasing. Organic volume also increased by 2.8%. 

Diageo reaffirmed its full-year guidance, attributing the increased growth rate in the third quarter compared to the first half of the fiscal year to sales phasing. The company expects sequential improvement in organic net sales growth for the remainder of the year. 

However, it continues to project a slight decline in organic operating profit in the second half, consistent with the decrease seen in the first half, incorporating the anticipated tariff effects for the 2024/25 financial year. 

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