(Bloomberg) -- A slowdown in Latin America, the Caribbean and the US pushed British distiller Diageo Plc to its first annual sales decline since the pandemic.
Shares in the maker of Johnnie Walker whisky plunged almost 10% in London to their lowest in four years after net sales fell 1.4% to $20.3 billion in the year ending June — the first annual drop since 2020.
Consumers have chosen cheaper options in markets such as Latin America and have been drinking stocks of spirits built up in the Covid-era boom, affecting Diageo’s sales. The company said the consumer environment remains challenging, with the drag on margins continuing into 2025.
Diageo has come under pressure following a profit warning last November, as the slowdown in North America compounded a collapse in demand in Latin America and the Caribbean.
Chief Executive Officer Debra Crew said drinkers in the US have reined in spending. “You do see persistent inflation that is really weighing on consumers and their wallets,” she told reporters on a call.
The lower spending saw volume in North America, Diageo’s biggest market, fall 4%, with sales of its Casamigos premium tequila brand down 22%. “We are faced with a challenging US environment, just like many other consumer-facing companies,” Crew said.
However, net sales of its ready-to-drink cocktails rose 15% in the US, with consumers spending on espresso martinis, margaritas and negronis.
Chinese consumers continue to drink spirits they have stored at home rather than going out and buying more, Crew said, because of the later easing of Covid lockdown restrictions there.
Diageo is not gaining market share in Mexico, Diageo’s second-biggest market in Latin America, Crew told reporters. “The downtrading in Scotch and tequila has impacted us,” she said.
(Updates with CEO comments, share price and additional details throughout.)
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