Billions wiped from Diageo market cap as shares tank on weak Latin America sales

(PA)

Diageo today saw as much as £5 billion wiped from its market cap after the London-listed drinks giant posted a fall in turnover for the first time since 2020.

The Smirnoff and Johnnie Walker owner said it had seen a 15% fall in revenues in Latin America, alongside a 13% drop in Africa and a 2% dip in sales in North America. That news has helped its shares slump as much as 10% in the opening minutes of trade.

CEO Debra Crew said the slump in demand was “attributable to a cautious consumer environment and the impact of lapping inventory replenishment in the prior year.”

But the company also warned: “The consumer environment continues to be challenging with conditions we saw towards the end of fiscal 24 persisting into fiscal 25.”

In Europe sales were more resilient, rising 12%. Sales in the UK were especially strong, with a near 1/3 rise in demand for Guinness. Overall turnover stood at $20.3 billion for the year to end June, down 1% on last year.

Nuno Teles, Managing Director for Diageo Great Britain, told the Standard: “We are a very resilient British business. Europe is a strong region [and] ’s another golden year for Guinness -- we have doubled the business with our 0.0% proposition.

“We had a setback in [Latin America] driven by excess inventory that we have now implemented the measures to address fully.”

Scotch was the weakest-performing drinks category for Diageo, with overall sales down 10% on last year, while gin fell 8% and tequila and vodka both saw 7% sales drops. Ciroc was the worst-performing brand, with revenue down by more than a quarter.

But beer picked up as a category with overall net sales up 14%, led by a surge in demand for Guinness.

"The gods of fashion have smiled upon Guinness, previously consumed by blokes my age, but now widely adopted by younger generations,” the boss of pub chain Wetherspoon, Tim Martin, said in a trading update earlier this year.

Diageo plans to open a new £73 million brewing facility in London’s Covent Garden next year.