Diageo (DGE.L), the world’s largest spirits producer known for brands like Johnnie Walker and Smirnoff, forecast flat organic sales for fiscal year 2026 as it increased its estimate of the annual impact from U.S. tariffs to $200 million, up from $150 million.
The company also raised its cost-savings target by about $125 million, now expecting to save around $625 million through its ongoing ‘Accelerate’ programme, which focuses on cutting advertising and promotional spending and improving supply chain efficiency, News.Az reports, citing Reuters.
Diageo reported organic sales growth of 1.7% in fiscal 2025, slightly ahead of analyst expectations of 1.4%. However, the company cautioned that macroeconomic uncertainty and changing consumer habits continue to pressure the spirits sector, especially in key markets.
“Macroeconomic uncertainty and the resulting pressure on consumers continues to weigh on the spirits sector,” Diageo said in its first results under interim CEO Nik Jhangiani.
The company is currently searching for a new CEO and CFO to lead a turnaround plan announced in May, which includes cost reductions and significant asset sales by 2028.
Spirits imported into the U.S. from the European Union now face a 15% baseline tariff as part of a recent trade deal. Major alcohol producers—including Diageo, Pernod Ricard, Rémy Cointreau, and Campari—are hopeful that exemptions will reduce the financial impact.
Diageo projects a slight decline in organic sales in the first half of fiscal 2026, with growth expected to pick up in the second half, which ends in June 2026.
