LONDON (ShareCast) - The beverage sector was hit hard on Thursday by disappointing updates from global drinks groups Diageo and Remy Cointreau.

Year-to-date organic revenue growth at London-listed Diageo was held back by sales declines in the third quarter due to weakness across many emerging markets, the company said this morning.

Diageo, famous for spirits brands Johnnie Walker, Captain Morgan and Smirnoff as well as Guinness stout, said that organic net sales fell by 1.3% in the three months to March 31st. As a result, growth fell to 0.3% for the first nine months of the year combined, down from 2% in the first half.

The company said that currency movements and “economic weakness” affected consumer confidence across many emerging markets in the third quarter, while consumer trends in the developed world were in line with those in the first half.

Diageo was down 3.3% at 1,837p in afternoon trade. Other stocks in London including Nichols and Stock Spirits were trading lower today.

Sentiment was also hit by guidance from French spirits maker Remy Cointreau after it said that full-year operating profit would drop by 35-40% due to weakness in China.

The group said it was “adversely affected throughout the financial year by the Chinese government's anti-extravagance policy, which had a negative impact on the consumption of premium spirits".


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BC

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