Diageo reported net sales of $4.931 billion for the first quarter of fiscal 2027, up 1.2% on a reported basis and 1.4% organically. Excluding the contribution from East African Breweries Limited (EABL), organic net sales rose 0.6%. Organic volume increased 1.1%, or fell 0.1% excluding EABL, while price/mix contributed 0.3% (0.7% excluding EABL). Management described the quarter as in line with expectations and left full-year guidance unchanged. The modest improvement therefore says more about the contribution of EABL and pockets of volume growth than a broad-based recovery across Diageo’s portfolio.
North America, which accounts for 36% of group net sales, remained the principal drag. Organic net sales declined 3.6%, with volume down 3.7% and price/mix essentially flat at +0.1%. In the United States, organic net sales fell 3.7%, with a small benefit from shipment phasing, while distributor stock levels remained in line with the prior year. Spirits performance was weak: Don Julio, Casamigos and Crown Royal each recorded double-digit declines, only partly offset by growth in Johnnie Walker. A packaging quality issue with Casamigos further weighed on spirits ready-to-drink performance. In beer, both Guinness and Smirnoff Ice RTD grew double-digit. Canada declined low-single-digit on continued spirits softness. The 3.6% decline was better than some market expectations, but compared with the same quarter last year, when North America organic net sales fell 2.7%, the region has not yet shown a clear turnaround. It remains the company’s largest challenge.
Performance elsewhere reflected different growth patterns. Europe, Middle East and Africa delivered 2.4% organic net sales growth, driven by 4.4% volume growth and a 2.0% decline in price/mix from targeted price repositioning. Growth was led by Türkiye, Africa and the Middle East, more than offsetting weakness in Italy and France. Johnnie Walker and Baileys contributed, while Smirnoff Ice supported RTD gains. Guinness grew strongly in parts of the region but declined low-single-digit in Great Britain and Ireland.
Asia Pacific grew 4.1% organically, with volume up 6.2% and price/mix down 2.1%. Double-digit growth in Global Travel more than offset a mid-single-digit decline in Greater China, driven by Taiwan. China Mainland was relatively flat in both Chinese white spirits and international premium spirits. South East Asia and North Asia grew mid-single-digit.
Latin America and Caribbean rose 4.8% organically, with volume up 7.0% and price/mix down 2.2% from targeted price repositioning. Growth across Central America and the Caribbean, South LAC and Colombia was partly offset by a double-digit decline in Mexico, where macroeconomic pressure on consumers continued. Brazil was broadly flat. Scotch growth, led by Buchanan’s and Johnnie Walker, more than offset tequila weakness in Mexico, while Smirnoff Ice supported RTD gains in South LAC and Brazil.
India recorded 3.4% organic net sales growth, but the composition differed sharply from other regions: volume fell 5.8% while price/mix rose 9.2%. Prestige & Above, which represents about 90% of India net sales, increased 7.1%, driven by double-digit growth in vodka and scotch, including Smirnoff local flavour innovation, the J&B relaunch, Black & White and the luxury portfolio. The Popular segment declined double-digit, affected by regulatory and excise policy changes in Maharashtra and Karnataka.
Corporate organic net sales grew 13.5%. Corporate is a reporting segment that includes EABL, which delivered double-digit growth in Kenya, Uganda and Tanzania and added 0.8% to group organic net sales. The sale of EABL to Asahi remains on track to complete in calendar H2 2026, so the contribution includes a business that is expected to leave the group.
Across the group, growth was concentrated in whisky, Guinness and Smirnoff RTD. These categories provided support across several markets, while tequila and other premium spirits continued to face pressure in North America. The contrast suggests that growth is increasingly dependent on individual brands, categories and consumption occasions rather than broad-based premium spirits demand.
For the full year, Diageo continues to expect broadly flat organic net sales growth. Organic operating profit is guided to grow low- to mid-single-digit, including approximately 40% of the roughly $850 million in cost savings from operating framework changes and approximately 25% of the roughly $150 million from supply chain initiatives. Free cash flow is expected around $2 billion after exceptional costs related to the framework changes and supply chain programme, excluding cash from EABL. The tax rate before exceptional items is expected around 25% and the effective interest rate around 4.0%.
Sir Dave Lewis, Chief Executive Officer, said the first quarter represented “a small step in the right direction” while the company implements significant change. He noted growth across Latin America and the Caribbean, Europe, Middle East and Africa, Asia Pacific and India, while acknowledging that North America remains the biggest challenge, with clear actions underway.
The quarter shows Diageo can still generate modest growth, supported by volume gains in several markets through price repositioning, continued premium strength in India, and contributions from Guinness, whisky and Smirnoff RTD. North America has not yet stabilised. Other regions are relying on different combinations of volume, price and mix. Sales growth remains limited, and the profit outlook continues to depend in part on cost savings. The company is not without growth, but it is finding that growth increasingly has to be assembled market by market rather than driven by one consistent logic.
