LONDON / BENGALURU – Global spirits giant Diageo (DGE.L) has trimmed its 2026 sales and profit forecast due to slowing demand in the United States and China, while leaving the company without a permanent CEO following the departure of Debra Crew in July. The announcement triggered a 3.5% drop in Diageo shares, erasing gains and bringing stock levels back in line with 2016 valuations.

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Weak Demand in Key Markets

Interim CEO Nik Jhangiani cited a softer-than-expected consumer environment in the U.S., as well as weakening demand in China, as primary reasons for the revised outlook. The company now expects flat or slightly lower sales for 2026, with only low- to mid-single-digit growth in operating profit, down from prior projections of mid-single-digit operating profit growth and modest annual sales increases.

In China, Diageo reported a double-digit decline in sales, particularly in the consumption of national spirit baijiu. North American sales were also pressured, with Don Julio tequila—previously a major growth driver—experiencing double-digit declines. Analysts, including James Edwardes Jones of RBC Capital, noted concerns over whether the brand can sustain its previous momentum.

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Uncertainty Over CEO Appointment

The company’s interim leadership has created uncertainty among investors. Jhangiani had expected a permanent CEO to be appointed by the end of October, but no announcement has been made, leaving questions about leadership and strategy. Some investors suggest this lack of clarity is hampering confidence in Diageo’s turnaround and growth plans.

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Cost-Cutting and Asset Sales

In response to the challenging market conditions, Diageo is implementing cost reductions and considering asset sales as the drinks industry grapples with:

• Post-pandemic cooling of consumer demand
• Trade and tariff-related uncertainties
• Shifts in global drinking habits

Despite these measures, weak performance in two of Diageo’s most critical markets continues to pressure revenue and investor sentiment.

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Market and Investor Implications

• Stock performance: Shares fell over 3% following the profit warning, highlighting investor caution.
• Strategic challenges: Sustained declines in North American and Chinese sales could affect long-term profitability.
• Leadership uncertainty: The ongoing CEO vacancy leaves questions over strategic direction.
• Industry trends: Diageo’s struggles mirror broader challenges in the global spirits market, including changing consumer behavior and geopolitical trade tensions.

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Key Takeaways

• Diageo lowers 2026 sales and profit guidance due to weak U.S. and China demand.
• Interim CEO Nik Jhangiani emphasizes cost management and growth initiatives.
• Share prices dropped 3.5% in early trading following the announcement.
• CEO appointment remains unresolved, creating strategic uncertainty.
• Key brands, including Don Julio tequila and baijiu, are experiencing double-digit sales declines.