Diageo Warns of Continued Challenges as Consumers Remain Cautious

By Andrea Figueras

Spirits maker Diageo said that the global environment remains challenging for both the beverage industry and the company due to a change in consumer habits after the pandemic surge.

"While consumers continue to be cautious in this environment, we are focused on strengthening the resilience of our business through operational excellence, productivity and strategic investments to win quality market share," Chief Executive Debra Crew said Thursday ahead of the company's annual general meeting.

Despite current woes, the CEO believes that the fundamentals of spirits industry remain strong and that once consumer environment improves, growth will return.

The U.K. company behind brands including Johnnie Walker whisky, Guinness beer and Smirnoff vodka confirmed its most recent targets. In its latest earnings report, it anticipated negative pressure on its organic operating margin to persist into fiscal 2025, but said it is focused on getting back into its medium-term guidance range of organic net sales growth between 5% and 7%.

Like Diageo, other beverage companies saw their sales skyrocket during the pandemic as consumers began drinking at home. However, the upward trend has been returning to more normalized growth levels, leaving companies with high inventories, one of the industry's main headaches.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

September 26, 2024 02:44 ET (06:44 GMT)

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