Diageo beats sales forecasts, but North America slump deepens

Diageo’s latest quarter showed a split screen: global brands and one-off buying helped the company beat sales forecasts, but the U.S. business, its biggest profit engine, kept sliding. The spirits maker posted organic net sales growth of 0.3% in the three months ended March 31, 2026, ahead of expectations for a 2.3% decline, while reported net sales rose 2.3% to $4.477 billion.

The strength came from familiar places with temporary lifts attached. Guinness demand improved in Britain and Ireland, while Europe, Latin America and the Caribbean, and Africa benefited from Easter timing and advance shipments ahead of the upcoming FIFA World Cup. Those gains were enough to offset a far weaker North America, where organic net sales fell 9.4% and tequila sales dropped by double digits. Diageo’s U.S. beer business was a rare bright spot, rising 9.1% on Smirnoff ready-to-drink products and Guinness.

The quarter reinforced the scale of the challenge facing chief executive Dave Lewis, who took over on January 1, 2026. Lewis said North America remained the company’s biggest challenge and pointed to interventions already underway, including price cuts on some tequila brands such as Casamigos. Diageo has previously said U.S. spirits performance has been hit by pressure on disposable income and competition from more affordable alternatives, a warning that suggests the weakness is tied to consumer behavior as well as brand execution.

Investors welcomed the better-than-expected top-line result, sending Diageo shares about 5% higher, but the market response did not erase the underlying concern. Over the first nine months of the fiscal year, reported net sales were $14.937 billion, down 2.2%, and organic net sales fell 1.9%, showing that the group has yet to recover from broader soft demand. Diageo said its Accelerate programme remained on track to deliver about $300 million of savings by the end of fiscal 2026, and it reiterated full-year guidance.

The company also flagged continued geopolitical uncertainty, including the impact of the conflict in the Middle East on energy, supply and distribution costs. Lewis is due to lay out a fuller strategy alongside full-year results on August 6, 2026, a date that is likely to matter more to investors than one strong quarter. For now, Guinness can cover some weakness elsewhere, but it cannot fully conceal how much Diageo still depends on a U.S. turnaround.