Diageo shares rise as Scotland’s largest whisky producer delivers some good news
“Diageo’s trading update shows tentative signs of stabilisation after a bumpy period, but the group is not out of the woods yet” – Adam Vettese, eToro
Johnnie Walker owner Diageo has revealed that sales grew unexpectedly in the latest quarter as growth in Europe helped to offset weaker trading in the US.
The FTSE 100 drinks giant, which ranks as Scotland’s largest whisky producer, said buoyant demand for Guinness in the UK and Ireland helped drive a rise in sales in Europe. Shares in the group were up as much as 5 per cent in Wednesday morning trading.
The positive update comes as the world’s largest spirit business - which has almost 30 malt distilleries in Scotland and owns global brands such as Guinness stout, Smirnoff vodka and Captain Morgan rum - continues to undergo a major turnaround under former Tesco boss Sir Dave Lewis.
He said that trade in North America was the group’s “biggest challenge” amid “soft” market conditions but stressed that it was already taking actions to address this. The group is also likely to benefit from the recent lifting of tariffs on Scotch whisky by US President Donald Trump.
Diageo said that organic sales had nudged up 0.3 per cent in the three months to March, with volumes up 0.4 per cent. Analysts had predicted a decline for the quarter.
It said this came despite a drag in North America, where it saw “high single-digit” decline due to weakness in US spirits sales. This was offset by “strong” growth in Europe, Latin America and Caribbean (LAC), and Africa, amid a benefit from the timing of Easter and advance sales ahead of the football World Cup.
In Europe, organic net sales grew by 8.8 per cent for the quarter to $1.05 billion (£770 million), led by strong sales of Guinness.
Lewis said: “We are pleased with the strong growth across Europe, LAC and Africa. 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 2026 guidance.”
Adam Vettese, market analyst for eToro, noted: “Diageo’s Q3 trading update shows tentative signs of stabilisation after a bumpy period, but the group is not out of the woods yet.
“The big cloud remains North America, where high single-digit declines continue amid weak consumer spending and intense competition. The new full strategy refresh on August 6 will be the real moment of truth with investors hoping this will be the catalyst for a sustained recovery.”
Dan Coatsworth, head of markets at AJ Bell, said: “While there are green shoots of a recovery in its latest trading update, it’s lopsided. Europe, Latin America and the Caribbean enjoyed decent quarterly growth whereas North America was disappointing.
“That’s troubling because the period included distributors stocking up in North America ahead of the football World Cup. Without that boost, the region’s showing could have been truly miserable.
“The positive share price reaction is investors breathing a small sigh of relief that at least some of Diageo has regained its mojo. Sadly, it remains a long journey to full recovery,” he added.
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