Johnnie Walker Maker Diageo Says It is Making Progress in Tough U.S. Booze Market — Update

By Joshua Kirby

Spirits group Diageo said it is moving in the right direction in the challenged American market, where some of its biggest labels continue to sell poorly.

The maker of Smirnoff vodka, Johnnie Walker whisky and George Clooney's Casamigos tequila said Thursday that U.S. sales fell 3.7% on year over the July-September period, the first quarter of the company's fiscal year. That reflected "continued market softness," Diageo said.

"In North America, we continue to focus on making our offer more competitive, and whilst this remains our biggest challenge, clear actions are underway," Chief Executive Dave Lewis said. The U.S. booze market has suffered in recent years from flagging demand as drinkers look to cut back for the good of their health and their wallets, and Diageo has seen some of its big brands lose share in a hotly competitive market.

Lewis, CEO of the London-listed group since the beginning of this year, has identified the U.S. as central to restoring Diageo's momentum. The company has lost more than half its share value over the last five years amid declining booze sales that have also weighed on other distillers, from Jack Daniel's maker Brown Forman to Pernod Ricard, the French group behind Absolut vodka and Jameson whiskey.

Some of Diageo's biggest brands in North America, including Don Julio tequila and Casamigos, continued to book sharp sales declines over the quarter. In ready-to-drink products like canned cocktails, one of the industry's fastest growing areas, Diageo said a "quality issue" with Casamigos packaging had weighed on performance.

Still, results in the first quarter "represent a small step in the right direction," Lewis said. Johnnie Walker sales rose in North America, as did those of its Guinness stout and Smirnoff Ice RTD. Overall sales in the region are likely to decline over the year as a whole, but Diageo's brands should gain back some market share from a year earlier, the company said.

The quarter was "less bad than expected" in the key U.S. market, analyst James Edwardes Jones at RBC Capital Markets wrote following the update.

"This was a decent first quarter," he said.

A drop in North America, the group's largest market by sales, was offset by organic growth in all other regions, including EMEA, Asia-Pacific and India. Total sales rose 1.4% on an organic basis to $4.93 billion over the quarter. Analysts had expected sales to lose 0.4% organically to $4.805 billion, according to an average of estimates compiled by the company ahead of the release.

The company backed its guidance for the full year, with organic sales expected to be flattish and operating profit to increase in the single digits, boosted by a chunk of the $1 billion cost-savings program that Lewis set out this summer.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

November 05, 2026 03:06 ET (08:06 GMT)