By Aimee Look
Diageo's revenue rose in the third quarter of its fiscal year as the Guinness maker seeks to revive lackluster drinks sales in North America.
The maker of Johnnie Walker whisky and Smirnoff vodka is striving to reverse dwindling sales in North America, where consumption of alcohol has been squeezed by inflation and growing health consciousness.
Net sales in the region fell 9.4% organically, primarily driven by a drop in volumes. Tequila net sales in North America have been particularly sluggish, showing double digit declines for the quarter.
"North America remains our biggest challenge, where market conditions are soft and our offer needs to be more competitive. Actions are already under way to address this," Chief Executive Officer Dave Lewis said.
To counter Diageo's lagging spirits portfolio in the U.S., newly-installed CEO Lewis has hinted at potential options, such as tapping the growing popularity of ready-to-drink canned cocktails. The market needs time and investment to prosper, Lewis said at Diageo's half-year results in February.
Elsewhere, Diageo had blockbuster growth for the quarter, particularly in Europe, Africa, and Latin America and the Caribbean. The Asia-Pacific region still had a marginal decline in organic net sales. Turnaround efforts at Diageo have included a cut to the group's dividend as Lewis looks to plough cash into investing behind brands, and into possible acquisitions.
Overall organic net sales rose 0.3% on year in the three months through March 31. Analysts had expected organic net sales to drop 2.3% year-over-year, according to company-compiled estimates.
Diageo booked $4.48 billion in overall net sales for the third quarter, compared with $4.38 billion the same quarter in the previous fiscal year.
The U.K.-based group reiterated its guidance for the full fiscal year, after previously slashing its forecast twice. It expects a 2% to 3% decline in organic net sales off the back of weak U.S. and China results.
Diageo isn't the only booze seller grappling with a tough market. French spirits company Pernod Ricard said last month it anticipates a 3% to 4% decline in net sales for the year, which it said was weighed down by the escalation of war in the Middle East. Jack Daniel's maker Brown-Forman has also cited sales pressure in the U.S.
But others, like Budweiser maker Anheuser-Busch InBev, are proving they can buck the decline. AB InBev reported its first sales-volumes growth in three years on Tuesday in its first quarter results. Likewise, Danish Brewer Carlsberg said that higher-end beer demand is raising volumes and revenue for the year, and Heineken booked a rebound in volumes for the quarter.
Write to Aimee Look at aimee.look@wsj.com
(END) Dow Jones Newswires
By Aimee Look
Diageo's shares climbed as sales beat analyst expectations despite a lackluster performance in North America.
Organic net sales rose 0.3% on-year for the third fiscal quarter, while analysts had anticipated a 2.3% drop, company-compiled estimates show. Shares ticked 5% higher in early morning London trading.
The maker of Johnnie Walker whisky and Smirnoff vodka is striving to reverse dwindling sales in North America, where consumption of alcohol has been squeezed by inflation and growing health consciousness.
Net sales in the region fell 9.4% organically, primarily driven by a drop in volumes. Tequila net sales in North America have been particularly sluggish, showing double digit declines for the quarter.
"North America remains our biggest challenge, where market conditions are soft and our offer needs to be more competitive. Actions are already under way to address this," Chief Executive Officer Dave Lewis said.
To counter Diageo's lagging spirits portfolio in the U.S., newly-installed CEO Lewis has noted potential options, such as tapping the growing popularity of ready-to-drink canned cocktails. The market needs time and investment to prosper, Lewis said at Diageo's half-year results in February.
"Given the importance of the U.S. to Diageo, it would be flippant to argue that things are on the mend yet," RBC Capital markets analysts wrote in a note to clients, adding that it is notable that the company said it is taking steps to make progress in the region.
Elsewhere, Diageo had blockbuster growth for the quarter, particularly in Europe, Africa, and Latin America and the Caribbean. The Asia-Pacific region still had a marginal decline in organic net sales. Turnaround efforts at Diageo have included a cut to the group's dividend as Lewis looks to plough cash into investing behind brands, and into possible acquisitions.
Diageo booked $4.48 billion in overall net sales for the third quarter, compared with $4.38 billion the same quarter in the previous fiscal year.
The U.K.-based group reiterated its guidance for the full fiscal year, after previously slashing its forecast twice. It expects a 2% to 3% decline in organic net sales off the back of weak U.S. and China results.
Diageo isn't the only booze seller grappling with a tough market. French spirits company Pernod Ricard said last month it anticipates a 3% to 4% decline in net sales for the year, which it said was weighed down by the escalation of war in the Middle East. Jack Daniel's maker Brown-Forman has also cited sales pressure in the U.S.
But others, like Budweiser maker Anheuser-Busch InBev, are proving they can buck the decline. AB InBev reported its first sales-volumes growth in three years on Tuesday in its first quarter results. Likewise, Danish Brewer Carlsberg said that higher-end beer demand is raising volumes and revenue for the year, and Heineken booked a rebound in volumes for the quarter.
Write to Aimee Look at aimee.look@wsj.com
(END) Dow Jones Newswires
May 06, 2026 03:31 ET (07:31 GMT)
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