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Diageo Sales Drop By 1.5% In First Quarter, But Company Projects Better Results Ahead

October 16, 2014

While Diageo’s organic net sales declined by 1.5% in its first fiscal quarter, the drinks giant says it expects improved performance—and positive sales growth—over the next three quarters of the year. Diageo’s overall drinks volume fell by 3.5% during the three-month period ended September 30, but that dropoff was partially offset by a positive price mix—driven by double-digit sales growth for its reserve brands.

Diageo eked out a 0.1% organic net sales gain in North America in its first quarter. It was the only region in which the London-based company experienced sales growth. Still, the market’s conditions remain challenging. “In North America, consumer demand for mainstream brands is still constrained by weak consumer confidence in average income households while our reserve brands and our innovations continue to perform well, as they do globally,” said Diageo CEO Ivan Menezes.

Beyond North America, Diageo’s organic net sales declined in Europe (-1.4%), Latin America and Caribbean (-1.4%) and Asia Pacific (-7.4%), and were flat in Africa. Sales in China fell by roughly 20% in the first quarter, but that was actually an improvement over the previous few quarters, suggesting that the impact of the market’s austerity campaign may be moderating.

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