Diageo PLC (LSE:DGE) reported a 1.2% increase in net sales to $4.93 billion for the first quarter ended 30 September 2026, compared with $4.88 billion a year earlier, as growth across several international markets offset continued weakness in North America.
The global drinks group recorded organic net sales growth of 1.4%, supported by higher volumes and a modest improvement in price and product mix. Excluding East African Breweries Limited (EABL), organic net sales increased 0.6%.
Diageo confirmed that first-quarter trading was in line with management expectations and maintained its financial guidance for fiscal 2027.
Organic Sales Increase Despite North American Weakness
Organic sales volumes increased 1.1% during the quarter, while price and product mix contributed a further 0.3 percentage points to growth.
Excluding EABL, volumes declined 0.1%, while price and mix improved 0.7%.
The company reported growth in whisky, Guinness and Smirnoff ready-to-drink products, although performance varied significantly across regions.
North America remained the principal area of weakness, with organic net sales declining 3.6% and volumes falling 3.7%.
In the United States, organic net sales decreased 3.7%, reflecting continued softness in consumer demand.
Diageo reported double-digit declines across Don Julio, Casamigos and Crown Royal, partly offset by growth in Johnnie Walker.
Guinness and Smirnoff Ice ready-to-drink products both recorded double-digit growth in the region.
International Markets Deliver Positive Organic Growth
Latin America and the Caribbean reported organic net sales growth of 4.8%, supported by a 7.0% increase in volumes.
Growth across Colombia and other regional markets offset weaker demand in Mexico, where macroeconomic pressures continued to affect consumers.
Asia Pacific organic net sales increased 4.1%, with volumes rising 6.2%. Stronger performance in global travel retail and several Asian markets offset weakness in Greater China.
Europe, the Middle East and Africa recorded organic net sales growth of 2.4%, supported by a 4.4% increase in volumes.
Growth in Türkiye, Africa and the Middle East offset weaker trading in Italy and France. Guinness delivered double-digit growth in Africa and German-speaking European markets, although sales declined in Great Britain and Ireland.
India reported organic net sales growth of 3.4%, driven by stronger pricing and product mix, which increased 9.2%, while volumes declined 5.8%.
The company’s Prestige & Above portfolio in India grew 7.1%, supported by whisky and vodka sales.
East African Breweries Supports Group Growth
East African Breweries Limited, reported within Diageo’s Corporate division, delivered double-digit organic sales growth across Kenya, Uganda and Tanzania.
EABL contributed approximately 0.8 percentage points to group organic net sales growth during the quarter.
Diageo said the proposed sale of EABL to Asahi remains on track for completion during the second half of calendar 2026.
The company has also incorporated the expected completion of its Royal Challengers Bengaluru transaction into its fiscal 2027 leverage assumptions.
FY2027 Organic Sales Outlook Remains Broadly Flat
Diageo maintained its full-year guidance for broadly flat organic net sales growth in fiscal 2027.
The company expects organic net sales in North America to decline by a mid-single-digit percentage, assuming the wider market contracts by approximately 3%.
Organic operating profit is forecast to increase by a low- to mid-single-digit percentage, supported by planned cost reductions.
The outlook incorporates approximately 40% of the targeted $850 million savings from changes to Diageo’s operating framework and approximately 25% of the planned $150 million savings from supply chain initiatives.
Capital expenditure is expected to reach approximately $1.25 billion, compared with $1.2 billion in fiscal 2026.
Free cash flow is forecast at approximately $2 billion, down from $3.2 billion in the previous year, after around $850 million in exceptional restructuring and supply chain programme costs and excluding cash proceeds from EABL.
Diageo expects its leverage ratio to finish fiscal 2027 around the midpoint of its targeted range of 2.5 to 3.0 times net debt to adjusted EBITDA, assuming completion of the planned transactions.
Management Highlights Continuing Market Challenges
Chief Executive Sir Dave Lewis said the first-quarter results were consistent with expectations, with growth across Latin America, Europe, the Middle East, Africa, Asia Pacific and India.
He acknowledged that North America remains the company’s largest challenge, with management implementing measures intended to improve competitiveness and market performance.
Diageo also highlighted continued uncertainty surrounding geopolitical developments and the impact of the Middle East conflict on energy costs, supply chains and distribution.
Despite these pressures, management maintained its expectations for the remainder of fiscal 2027.
More About Diageo
Diageo PLC (LSE:DGE) is a global producer and distributor of alcoholic beverages, with operations spanning spirits, beer and ready-to-drink products. Its portfolio includes Johnnie Walker, Guinness, Smirnoff, Baileys, Don Julio, Tanqueray and Crown Royal. The company sells its products in nearly 180 countries and is listed on the London and New York stock exchanges.
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