Diageo reports 1.4% decline in net sales amid challenging global environment 

UK – Beverage giant Diageo has reported a 1.4 percent decline in net sales, amounting to US$20.3 billion, for the year ended June 30, 2024.  

This decrease is attributed to unfavorable foreign exchange impacts and an organic net sales decline. 

The company’s organic operating profit fell by US$304 million (4.8%), largely driven by a significant downturn in the Latin America and Caribbean (LAC) region.  

In the LAC region, reported net sales declined by 15 percent, while organic net sales dropped by 21 percent. This decline was driven by soft demand for international premium spirits, adjustments of high inventory levels to match current consumer demand, and the effects of lapping strong double-digit growth from the previous year. 

Diageo had previously cautioned in November that pressures in its LAC markets would affect its overall business performance.  

Despite these challenges, Diageo’s organic net sales increased by 1.8 percent, driven by a 3.9 percentage point price/mix improvement, which was partially offset by a 2.1 percent decline in volume.  

Debra Crew, CEO at Diageo, said: “While fiscal 24 was a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility, we focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves.” 

Growth Africa, Asia Pacific and Europe regions helped to offset declines in North America, which faced a cautious consumer environment and the impact of inventory replenishment in the prior year. 

In Africa, Diageo benefitted from price increases and delivered a strong performance despite a challenging macroeconomic environment with persistent inflationary pressures.  

Reported net sales in Africa declined by 13 percent, primarily due to unfavorable foreign exchange impacts, particularly the weakening of the Nigerian naira, though this was partially offset by organic growth.  

Spirits net sales in the region fell by 2 percent, driven by a 16 percent volume decline, which was somewhat mitigated by price increases.  

Conversely, beer net sales grew by 19 percent, supported by both price increases and a 4 percent volume growth. 

In June 2024, Diageo announced an agreement to sell its 58.02% shareholding in Guinness Nigeria plc to N-Seven Nigeria Ltd., part of the Tolaram group.  

Upon completion of the sale, Guinness Nigeria plc will enter into long-term license and royalty agreements to continue producing the Guinness brand and other locally manufactured Diageo ready-to-drink and mainstream spirits brands. Diageo expects the sale to be completed by the end of June 2025. 

Looking ahead to fiscal 2025, Diageo anticipates that the negative pressure on organic operating margins seen in the latter half of fiscal 2024 will persist. 

“That said, we will focus on strengthening the resilience of our business and winning with the consumer,” read the company statement. 

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