By Shashwat Awasthi and Emma Rumney
(Reuters) -Diageo trimmed its 2026 sales and profit forecast on Thursday due to weakening U.S. and Chinese demand and left the lingering question of who will lead the world’s top spirits maker unanswered after failing to announce a permanent CEO.
Shares in the maker of Johnnie Walker whisky and Smirnoff vodka fell some 3.5% in early trade and back in line with 2016 levels, compounding an almost 30% decline since the start of the year.
Diageo is attempting to cut costs and sell assets as the drinks industry contends with cooling post-pandemic demand, tariff-related uncertainty and shifting consumer drinking habits.
But stubbornly low sales in the United States and China – two crucial spirits markets where consumer confidence is low or customers’ finances are stretched – continue to punish Diageo and its peers.
“We are not satisfied with our current performance and are focused on what we can manage and control,” interim CEO Nik Jhangiani said in a trading update, adding that the company was working on plans to drive growth.
NO CEO ANNOUNCEMENT, TROUBLES IN CHINA AND US
Jhangiani, who stepped in to run Diageo after the abrupt departure of former boss Debra Crew in July, had earlier said he expected a decision to be made on the appointment of a permanent CEO by the end of October.
Some investors say the question mark over who will lead Diageo is preventing them from fully buying into its turnaround plans.
Those revival efforts took a further knock on Thursday when Diageo said it now expects its 2026 sales to be flat or slightly lower with only low- to mid-single-digit growth in operating profit.
It had earlier forecast annual sales performance similar to last year, when sales grew 1.7%, along with mid-single-digit operating profit growth in 2026. The decision to revise the outlook came despite better-than-expected, albeit flat, first-quarter sales performance.
Diageo flagged a double-digit decline in sales in China, driven by a drop in consumption of national spirit baijiu. In North America, where the company’s Don Julio tequila in particular has been a critical growth engine, tequila sales also fell by double digits.
“We wonder if Don Julio has stopped defying gravity,” James Edwardes Jones, analyst at RBC Capital, said.
(Reporting by Shashwat Awasthi in Bengaluru and Emma Rumney in London; Editing by Louise Heavens and Joe Bavier)
