A slowdown in Latin America, the Caribbean and the US pushed Guinness owner Diageo to its first annual sales decline since the pandemic despite a pick-up in sales in Ireland and Britain.
Shares in the maker of Johnnie Walker whisky plunged as much as 8 per cent in early London trading after it said net sales fell 1.4 per cent to $20.3 billion (€18.74 billion) in the year ending June – the first annual drop since 2020.
Consumers have chosen cheaper options in markets such as Latin America and have been drinking stocks of spirits built up in the Covid-era boom, affecting Diageo’s sales. The company said the consumer environment remains challenging, with the drag on margins continuing into 2025.
Bucking the trend, Diageo said net sales in Ireland increased by 7 per cent, primarily driven by double-digit growth in Guinness. The group increased its share of pub sales, it said, “through strong brand building and new occasions, supported by Guinness 0.0″. Sales in Britain, meanwhile, also jumped 5 per cent in the year, driven by the popularity of Guinness.
Diageo has come under pressure following a profit warning last November, as the slowdown in North America compounded a collapse in demand in Latin America and the Caribbean.
Chief executive Debra Crew said drinkers in the US have reined in spending. “You do see persistent inflation that is really weighing on consumers and their wallets,” she told reporters on a call.
Chinese consumers continue to drink spirits they have stored at home rather than going out and buying more, she said, because of the later easing of Covid lockdown restrictions there.
Diageo is not gaining market share in Mexico, Diageo’s second-biggest market in Latin America, Ms Crew said. “The downtrading in Scotch and tequila has impacted us,” she said.
“With iconic brands that have been enjoyed for decades, Diageo takes a long-term view, and will continue to invest in our brands, people and diversified footprint to deliver sustainable long-term growth and generate shareholder value,” she said. – Bloomberg
