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Drinks group Diageo has lowered its forecast for sales and profit growth this year as it struggles with reduced demand from consumers in the US and China.
The maker of Guinness and Johnnie Walker whisky on Thursday said it expected organic sales growth to be “flat to slightly down” in the year to July 2026, compared with previous expectations of flat sales.
Diageo blamed lacklustre spirit demand in China and a weaker than anticipated consumer environment in the US.
The FTSE 100 group also cut its forecast for annual organic profit growth to a low to mid single-digit percentage, compared with its previous forecast for mid single-digit growth.
Diageo’s shares fell 2.7 per cent, extending this year’s decline to 31.5 per cent.
Diageo has been beset by challenges since the sudden death of former boss Ivan Menezes in 2023, which hastened the appointment of his successor, Debra Crew. Just five months into her tenure Diageo disclosed a shock profit warning after a drastic sales slump in Latin America.
A slowdown in sales at the spirits group comes during a period of turbulence in its boardroom. Diageo abruptly parted ways with Crew in July, replacing her on an interim basis with chief financial officer Nik Jhangiani.
Diageo had previously said it expected to make a decision on a new permanent chief executive by October but did not provide any update on its search on Thursday.
The Financial Times previously reported that Crew’s departure came days after she told the group’s chair, Sir John Manzoni, that her position had been made untenable by the board’s failure to quash speculation that Jhangiani was angling for her job.
While Jhangiani was still viewed as Crew’s natural successor by shareholders, Manzoni had told investors that a decision would not be rushed, said a person close to the company.
Chris Beckett, consumer staples analyst at Quilter Cheviot, said the lack of an announcement on a new chief executive was a “big disappointment” and that it was surprising Jhangiani had not been given the role permanently.
“He is a very rational executive with a good plan around cost cutting and turning the business around,” Beckett said. “The lack of announcement today suggests an external appointment may come and this may result in a complete shift in strategy.”
Diageo is holding its annual meeting later on Thursday.
The maker of Captain Morgan and Casamigos is being buffeted by US President Donald Trump’s tariffs and is mired in a long-term battle against moderating alcohol consumption.
The company said on Thursday that it continued to expect a $200mn hit to operating profit from tariffs on its imports into the US, although it believed it could mitigate half this impact.
Net sales at the drinks group fell 2.2 per cent to $4.9bn in the three months to September 30. In the US, spirit sales were down by 4.1 per cent in the quarter, partly due to elevated tequila sales in the same period last year.
Organic sales in Asia-Pacific declined 7.5 per cent, primarily driven by poor performance in China.
Guinness continued to be a bright spot for the group with sales growing by “high single digits” in Europe, helped by ongoing demand for its alcohol-free version.
Jhangiani said: “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.”