Double-digit growth in Asia Pacific travel retail helped spur a +4.1% increase in Johnnie Walker-to-Smirnoff UK drinks company Diageo’s organic net sales for the region during the first quarter of fiscal 2027 ended 30 September.
Mid-single-digit gains in Southeast Asia and North Asia also boosted the Asia Pacific result.
Diageo reported a +1.2% increase in reported net sales to US$4.9 billion for the first quarter of fiscal 2027 ended 30 September. Positive organic growth was partly offset by the negative impact of foreign exchange and disposals.
Organic net sales grew +0.6% excluding East African Breweries Limited/EABL (+1.4% including EABL, in which Diageo has agreed to sell its 65% controlling stake to Japan’s Asahi Group Holdings), as a +0.7% improvement in price/mix offset a -0.1% decline in volumes.
The company maintained its full-year guidance.
Diageo Chief Executive Officer Sir Dave Lewis said, “Overall, Q1 was in line with expectations, and we have reiterated our full-year guidance.
“Whilst the market remains challenging, and volatility continues given the geopolitical uncertainty and impact of the ongoing conflict in the Middle East on energy, supply and distribution, results in the first quarter represent a small step in the right direction.”
Regional performance: China soft, Latin America/Caribbean buoyant
Within Asia Pacific, Greater China organic net sales declined by mid-single digits, reflecting weakness in Taiwan. In Mainland China, sales of Chinese white spirits and international premium spirits were broadly flat. Guinness recorded double-digit growth.
Latin America and the Caribbean led regional growth at +4.8%. Scotch whisky recorded high-single-digit growth across several markets in the region, while ready-to-drink sales rose double digits, led by Smirnoff Ice. India grew +3.4%, with the Prestige & Above segment up +7.1% on double-digit gains in vodka and Scotch.
EMEA sales rose +2.4% as gains in Türkiye, Africa and the Middle East outweighed declines in Italy and France. Spirits and ready-to-drinks were the key drivers of growth.
US net sales fell -3.6%. Growth in Johnnie Walker partly offset declines in Don Julio, Casamigos and Crown Royal, while Guinness and Smirnoff Ice both recorded double-digit growth in North America.
“We were pleased with the growth across LAC, EMEA, APAC and India. North America remains our biggest challenge. The market remains soft, and our focus remains making our offer more competitive,” Lewis said.
“Clear actions are underway as part of the turnaround plan that we set out at our Capital Markets Day in August and our focus is firmly on execution. We remain confident that we can return Diageo to a business that is consistently creating value for shareholders.”
Outlook
Diageo expects broadly flat organic net sales and low- to mid-single-digit organic operating profit growth in fiscal 2027.
The company anexpects a low to mid-single-digit increase in operating profit. This operating outlook includes around 40% of the estimated US$850 million in savings from changes to Diageo’s operating framework. It also includes around 25% of the estimated US$150 million in savings from supply chain initiatives. ✈
