Diageo, the owner of popular spirits brands such as Johnnie Walker and Tanqueray, has forecasted a slowdown in growth during the first half of its fiscal year. The company attributes this to a weaker performance in the Latin America and Caribbean region, which represents approximately 11% of its net sales value.
According to Diageo's latest projections, organic net sales from Latin America and Caribbean are expected to decline by over 20% compared to the previous year, encompassing the first half of fiscal year 2024 ending on December 31st. Moreover, the operating profit growth for the same period is anticipated to fall from the £3.16 billion ($3.86 billion) reported in the previous year.
However, the spirits giant believes that the second half of the fiscal year will witness a gradual improvement in both organic net sales and organic operating profit growth. In addition, Diageo plans to invest more in advertising and promotion across other regions to support net sales. Although cost inflation is expected to continue, the company aims to counterbalance it through pricing actions.
As for the North American market, Diageo foresees a gradual improvement in organic net sales growth during the first half of the fiscal year while maintaining distributor inventory at historical levels.