Diageo US spirits sales suffer 15.4% drop in Q3
CEO Dave Lewis said Diageo’s North America offer “needs to be more competitive” after the firm posted a 0.3% sales uptick in its third quarter (Q3).
For the three months ending 31 March 2026, the Johnnie Walker and Don Julio owner recorded net sales of US$4.48bn. The figure marked a slight 0.3% organic rise on the same period from the previous year, and a 2.3% increase on a reported basis.
Volumes were also up by 0.4% in the quarter.
Commenting on the results, Diageo’s chief executive officer (CEO) Dave Lewis labelled North America as the company’s “biggest challenge”.
Calling the market conditions “soft”, he said “our offer needs to be more competitive” and that “actions are already underway to address this”.
North America is Diageo’s largest market, accounting for 38% of its net sales.
Diageo’s Q3 organic sales of US$1.71bn in the region were down by 9.4% compared with the same period in 2025.
In the US specifically, spirits sales were down by 15.4%. Its Tequila business suffered a double-digit decline due to ‘tough prior year comparatives, competitive pressure and category softness’.
Diageo noted that Q3 shipments in the country were positively impacted by distributors stocking up ahead of the Fifa World Cup in June.
In Asia-Pacific, which represents 18% of its net sales, Diageo’s organic net sales suffered a small dip of 0.8%.
The company said this was driven by weakness in Greater China and continued weakness in Chinese white spirits, which were in decline by double digits. Diageo is rumoured to be looking for buyers for its baijiu business.
Diageo’s international premium spirits managed low single-digit growth, supported by the Chinese New Year’s later positioning in the calendar.
India, meanwhile, reported high single-digit growth excluding the Maharashtra state, which was impacted by an excise tax increase.
Other continents: strong growth
Lewis said Diageo was “pleased with the strong growth” across Europe, Latin America and the Caribbean (LAC) and Africa, with the latter regions growing by 16.2% and 17.1% respectively.
In LAC, the company benefited from the upcoming Fifa World Cup with distributor buy-in ahead of June’s football tournament, as well as Easter being part of the quarter.
Brazil was singled out for double-digit net sales growth. On the contrary, Mexico suffered high single-digit decline.
Spirits saw double-digit growth led by Scotch, while Diageo’s ready-to-drink (RTDs) segment in LAC also posted strong growth, driven by Smirnoff Ice in Brazil.
In Africa, Diageo’s sales were lifted by double-digit growth in Tanzania, Uganda and South Africa.
Spirits in the region grew by double digits, led by Kenya Cane. Strong growth in RTDs was again led by Smirnoff Ice, this time in South Africa.
Diageo’s European business also performed well, growing by 8.8%. Guinness led growth in Great Britain and Ireland, while spirits drove sales in the Middle East and North Africa (MENA), Central and Eastern Europe, and Türkiye.
Diageo’s spirits segment in Europe saw a high single-digit increase. Scotch was a strong point, led by Johnnie Walker in MENA and Türkiye.
Overall, Diageo’s organic sales guidance for its fiscal 2026 year remains unchanged from the readjustment in its H1 results, with a forecasted drop of 2%-3%.
Diageo noted it is on track to save US$300m by the end of fiscal 2026 through its cost-cutting Accelerator programme.
The sale of its Royal Challengers Bengaluru cricket business (completed in March 2026) and shareholding in East African Breweries Limited (EABL) will also trim costs.
Lewis added: “Progress on the redesign of our new strategy and the shaping of a more competitive operating framework is well under way.
“While we are mindful of continued geopolitical uncertainty, including the impact of the ongoing conflict in the Middle East on energy, supply and distribution, we are reiterating our fiscal 26 guidance.”
Lewis, who assumed the CEO position from 1 January, previously said the business would target the mass market to curb falling sales.
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