Diageo buoyed by Guinness boom as Europe offsets US slowdown

Diageo has reported unexpectedly stronger sales in its latest quarter, with robust demand in Europe — led by Guinness in the UK and Ireland — helping to offset a weaker performance in the United States.

The FTSE 100 spirits giant said organic sales rose 0.3pc in the three months to March, ahead of analyst expectations for a decline. Volumes also edged up 0.4pc, signalling tentative stabilisation after a volatile period for the drinks industry.

Shares in the company rose on Wednesday morning following the update.

The performance comes as Diageo continues a wider turnaround strategy under former Tesco chief Sir Dave Lewis, who has been tasked with steadying the business amid shifting consumer trends and uneven global demand.

North America remained the group’s biggest challenge, with Diageo reporting a “high single-digit” decline in sales driven by weaker demand in the US spirits market.

However, this was more than offset by stronger trading in Europe, Latin America and Africa, where the company saw solid growth across its portfolio.

In Europe alone, organic net sales rose 8.8pc to $1.05bn (£770m), with Guinness singled out as a key driver of performance in the UK and Ireland.

The company also benefited from timing effects, including Easter demand and early orders ahead of the 2026 World Cup.

Sir Dave said the business had delivered “strong growth across Europe, LAC and Africa”, while acknowledging continued uncertainty in global markets.

“We are mindful of continued geopolitical uncertainty, including the impact of the ongoing conflict in the Middle East on energy, supply and distribution,” he said, adding that the group was nonetheless maintaining its full-year guidance.

Diageo, which owns brands including Johnnie Walker and Gordon’s gin, is seeking to rebalance growth across regions after a period of softer trading in key developed markets.

Analysts said the update pointed to early signs of stabilisation but warned that conditions remain challenging.

Adam Vettese, market analyst at eToro, said: “Diageo’s Q3 trading update shows tentative signs of stabilisation after a bumpy period, but the group is not out of the woods yet.”

Despite the US weakness, the stronger-than-expected performance in Europe was enough to reassure investors, with shares moving higher in early trading.