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Diageo warns of tariff uncertainty amid weak H1
By Nicola CarruthersDon Julio owner Diageo saw its organic sales rise by 1% in the six months to December 2024 but the forthcoming US tariffs could impact the group’s growth trajectory.

The group’s sales declined by 0.6% on a reported basis to US$10.9 billion for the first half (H1) of its financial year, which was attributed to an ‘unfavourable’ foreign exchange rate. In fiscal 2024 (year ending 30 June 2024), Diageo sales were flat overall due to the Latin American and Caribbean (LAC) region, which plunged by 21.1%.
Diageo’s organic operating profit for the second half of fiscal 2024 dropped by 1% to US$3.15bn.
The group’s CEO, Debra Crew, noted the organic H1 sales uptick marked a return to growth for the London-headquartered firm, within the context of a “challenging industry backdrop” and “inflationary pressures”.
She added: “While the pace of recovery has been slower in several key markets, we remain confident of favourable long-term industry fundamentals and more importantly in our ability to outperform the market.
“Spirits remains an attractive sector with a long runway for growth, as we expect to continue to gain share within total beverage alcohol (TBA).”
Tariff action
Addressing the tariff situation in the US, with Mexican and Canadian products to be hit with a 25% import tax, Crew said Diageo had “anticipated and planned for a number of potential scenarios”.
She said US president Donald Trump’s move could impact the momentum the group had built during the first half of its financial year while adding “further complexity” in providing sales forecasts.
The tariffs would impact the group’s Tequila portfolio, which includes Don Julio and Casamigos, as well as Canadian whisky Crown Royal. Sales of US spirits, such as Aviation Gin and Bulleit whiskey, could also be impacted as several Canadian provinces had pledged to remove American-made products in retaliation.
Diageo said in the past it had “demonstrated agility in navigating tariffs on input costs”.
In a statement, the company said it would implement a number of actions to “mitigate the impact and disruption” including pricing and promotion management, inventory management, supply chain optimisation and reallocation of investments.
The statement continued: “Some of these actions can be implemented rapidly and others will take time. We will continue to be agile and respond with speed as key details are confirmed.”
The company said it would provide updates “as required and appropriate” once it is able to “more accurately assess the impact on future financial performance”.
Crew said the business would also “continue to engage with the US administration on the broader impact that [tariffs] will have on everyone supporting the US hospitality industry”.
Target scrapped
In its full-year outlook, the group said it had expected to deliver a sequential improvement in organic net sales growth compared with the first half of fiscal 2025.
However, Trump’s recent tariff announcement could affect the group’s growth trajectory and the firm has now removed its medium-term guidance of a 5%-7% organic net sales increase for the full year.
Diageo still expects to deliver ‘strong market share performance’.
Looking at the performance of the group’s key brands during H1, Cîroc suffered the biggest organic sales decrease, down by 32%.
Most of Diageo’s leading spirit brands were in decline, including Tanqueray (down 9%), Captain Morgan (down 8%), Bulleit (down 8%) Smirnoff (down 7%) and Baileys (down 3%).
Casamigos saw its sales tumble by 21% but its stablemate Don Julio skyrocketed by 50% after the brand’s US sales soared by 61%.
The group’s Scotch malts portfolio plummeted by 20%, while blended Scotch brand Buchanan’s decreased by 13%.
Geographical performance
Asia Pacific was the only region to report a decline, down by 0.3% organically. Johnnie Walker plunged by 12% in the market, while The Singleton decreased by 17%.
Sales in North America were stagnant but gains were made by Crown Royal, Don Julio, Ketel One vodka, and Guinness.
Crew said: “Growth in four of our five regions was supported by market-share gains.
“Notably, in North America, we outperformed the market with high-quality share growth and positive organic net sales growth, driven by strong execution and momentum in Don Julio and Crown Royal.”
Sales in Europe (up 1%) were led by growth in Turkey (up 20%), Great Britain (up 2%), Ireland (up 5%) and Eastern Europe (up 8%).
Within the market, spirits sales dropped by 3% while beer rose by 13%. Smirnoff, Gordon’s and Tanqueray were down by double digits, with only Johnnie Walker and Baileys posting small upticks across the group’s key spirits brands.
The LAC region returned to growth (up 5%) following a double-digit drop in the previous six months. Old Parr, Buchanan’s and Don Julio were the main growth drivers for spirits in the region.
The Africa region saw sales rise by 9% with spirits up by 5%, driven by strong growth in rum, gin and Tequila, partially offset by a decline in Scotch.
Last month, Diageo sold its 80.4% stake in Guinness Ghana to French wine company Castel Group for US$81 million. Under the new agreement, Castel Group will continue to produce Diageo spirits labels such as Orijin, Smirnoff Ice, and other mainstream brands.
There was speculation in recent weeks that Diageo would sell Guinness and its minority share in Moët Hennessy, the wine and spirits arm of LVMH, but the group denied the rumour.
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