Despite an uptick in revenue from Ireland and Britain, Diageo, popularly known as the owner of Guinness, reported its maiden annual sales reduction since the onset of the pandemic attributed to a slump in the markets of Latin America, the Caribbean and the United States. This precipitated an 8 per cent drop in early London trade for the Johnnie Walker whisky-producing company after a 1.4 per cent fall in its total yearly sales, a first since 2020.
The decline in Diageo’s sales was influenced by consumers’ preference for cheaper alternatives in markets such as Latin America and the depletion of spirit stockpile amassed during the Covid-era boom. The firm emphasised the sustained difficulty in the consumer landscape, projecting continued pressure on margins through to 2025.
Contrarily, Diageo celebrated a 7 per cent rise in net sales in Ireland, chiefly spurred by Guinness recording strong double-digit growth. Diageo amplified its pub sales share through effective brand promotion and novel opportunities, propped up by the non-alcoholic Guinness variant. UK sales also saw a 5 per cent rise within the same period, a testament to the brew’s popularity.
The profit warning that Diageo issued in November has accentuated pressure on the company. This was compounded by North American market stagnation and drastic declines in consumer demand from Latin America and the Caribbean.
CEO Debra Crew noted that consumers’ spending habits have changed, with inflation notably impacting consumers’ fiscal ability. Furthermore, she noted Chinese consumers’ preference for consuming their stockpiled spirits over purchasing new stock due to the delayed Covid restriction relaxations in China.
Diageo’s market share in Mexico, its second-largest Latin American market, has remained stagnant as per Crew’s admission. She cited the low performance of Scotch and tequila as crucial factors. Regardless, with its focus on long-term strategy, Diageo pledges to continue investing in their brands, workforce and diverse footprint, with the aim of fostering sustainable growth and bringing increased value to shareholders.