LONDON (ShareCast) - (Sharecast News) - Drinks maker Diageo cut its full-year sales and profit forecasts on Thursday amid weakness in Chinese white spirts and a slowdown in demand in North America.
The company now expects 2026 organic net sales to be flat to slightly lower. It said this includes adverse impact from Chinese white spirits and a weaker-than-expected US consumer environment.

Meanwhile, organic operating profit growth is expected to be low to mid-single digit.

For the first quarter, Diageo said organic net sales were flat, with organic volume growth of 2.9% offset by negative price/mix of 2.8%, largely due to adverse mix in Asia Pacific due to the weaker results in China in Chinese white spirits (CWS).

It pointed out that excluding this, price/mix would have been relatively flat.

Interim chief executive Nik Jhangiani said: "Net sales were flat organically in Q1, with growth in Europe, LAC and Africa offset by weakness in Chinese white spirits and a softer US consumer environment than planned for.

"We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritising investment and adapting more quickly to an evolving consumer environment.

"We are well advanced in sharpening our strategy, and we are developing and already implementing clear plans to drive growth across the broader portfolio, ensuring that we meet relevant consumer occasions of the future. Early results from our initiatives to strengthen our commercial execution capabilities, notably in Europe, are encouraging, and we are embedding a more rigorous performance-driven culture across the business."

At 0955 GMT, the shares were down 2.6% at 1,750.50p.

Russ Mould, investment director at AJ Bell, said: "Shareholders in Diageo have been left drowning their sorrows again as the drinks giant served up another disappointment in a year littered with them.

"This latest update increases the pressure on the Diageo hierarchy to fill the leadership vacuum created by the departure of CEO Debra Crew in July and halt the sense of drift which is pervading the business. The weak outlook for 2026 reflects poor spirit sales in China and a weaker US consumer environment.

"The fear for markets will be that Diageo's performance reflects more than just the ups and downs associated with fluctuations in the economy and instead hints at shifting drinking habits and/or the diminished appeal of Diageo's key brands. The weak Chinese business also suggests one of Diageo's key levers of growth - selling more to an expanding middle class in emerging markets - has broken down.

"Diageo has been struggling since the passing of the late CEO Ivan Menezes in 2023, and its travails may lead to pressure for more dramatic action to turn around the company's fortunes, including a potential spin-off of Guinness to create a business with a distilled focus on spirits."

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