Diageo reported flat organic net sales for the first quarter ended September 30, 2025. Strong growth across Europe, Latin America and Africa was offset by weakness in Chinese white spirits and a softer consumer environment in the United States.
Reported net sales fell 2.2% to $4.9 billion, mainly due to disposals. Organic volumes were up 2.9%, but this was cancelled out by a 2.8% negative price/mix, mostly from weaker performance in China’s baijiu category. The company said this alone reduced group net sales by around 2.5% in the quarter.
Interim Chief Executive Nik Jhangiani said Diageo was “not satisfied with current performance.” However, he added that the company was taking quick action to improve efficiency and adapt to changing consumer trends.
The company’s “Accelerate” programme, launched in May 2025, aims to save about $625 million over three years. Diageo is using AI and data tools to make marketing and investment decisions more targeted, while also simplifying internal processes to become more agile.
For fiscal 2026, Diageo expects sales growth to remain flat or slightly down. Operating profit is expected to grow in the low to mid-single digits, helped by cost savings. The company also plans to generate around $3 billion in free cash flow this year, up from $2.7 billion in fiscal 2025.
Regionally, North America (38% of total sales) fell 2.7% as the US spirits market softened, especially tequila. Europe (25%) grew 3.5%, led by Guinness, Baileys and Johnnie Walker in Türkiye and the Middle East. Asia Pacific (18%) dropped 7.5%, mainly due to Chinese white spirits, though India saw strong double-digit growth. Latin America and the Caribbean rose 10.9%, driven by Brazil, while Africa grew 8.9% with strong beer and RTD sales.
Jhangiani said Diageo remains confident about the future. “We are sharpening our strategy, focusing on what we can control, and acting with speed to drive efficiencies,” he said. He added that the company’s leading brands such as Johnnie Walker, Guinness, Baileys and Smirnoff Ice continue to perform well, especially in emerging markets.