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# Diageo Profit Plunged 26% in Year as Net Sales Eased 3% (Organic Sales -2%)
- URL: https://bevnews.net/diageo-profit-plunged-26-in-year-as-net-sales-eased-3-organic-sales-2/
- Published: 2026-08-07T05:20:35.000Z
- Updated: 2026-08-07T05:20:35.000Z
- Author: Joel Whitaker
- Tags: Earnings

**Diageo plc** reports for the year ended June 30 net profit of $1.96 billion, or 78.1 cents a share, on net sales of $19.64 billion. Volume eased 0.4% resulting in a negative price/mix of 1.6%. 

The company attributed the negative price mix to U.S. Spirits performance and weaker sales in CWS, saying it saw growth in Europe, Latin America/Caribbean and Africa, offset by weakness in the U.S. and Asia Pacific. 

Special one-time charges of $900 million related to restructuring were largely responsible, the company said, for a 27.2% decline in operating profit. Excluding those exceptional items, Diageo said, organic operating profit rose 2%.

CEO **Dave Lewis** said the revised opeerating framework announced previously "is being rolled out across Diageo." In 2026, the change costabout $800 million, about 70% of the cost of the two-year program. Savings will be realized over two years, starting in Fiscal 2027, and "will allow us to invest in the turnaround without needing to reduce operating profit."

**North American Results**

In North America, reported volume fell 6.9% and net sales fell 9.1%. Diageo slashed its North American marketing spending 15.4%. Operating profit net of exceptional items fell 8.6%. With those exceptional items included, operating profit fell 14.8%.

Organic volume fell 6.7%, net sales was down 8.4%. Marketing spending was slashed 13.6% and operating profit before exceptional items was down 10%.

The company attributed the 8.4% decline in organic net sales primarily to weakness in the U.S., with the 11.5% decline in U.S. Spirits only partly offset by growth in Diageo Beer Co. US. The weakness in the U.S. affected Canada, where organic volume fell 6.7%, only partly offset by Diageo Beer Co. US growth.

Much of the problems in Diageo's U.S. Spirits operations can be explained in three words: Tequila and Crown Royal. Diageo's tequila net sales plunged 21.1%, driven by both **Don Julio** and **Casamigos**.

 Don Julio's net sales fell 19.2%, nearly double the 10.1% decline in depletions, which Diageo explained was a result of "lapping inventory  
replenishment and double-digit growth last year." Casamigos net sales plunged a stunning 27.7%, with depletions down 23% leading to a decision to lower Casamigos pricing to make it more affordable.

**Our Analysis:** The net effect of this will be a two-brand tequila hierarchy at Diageo. Don Julio will remain Diageo's premier, higher-priced, super-premium label. Officials note it has maintained steadier equity. 

Casamigos is being slotted beneath Don Julio on the pricing ladder to appeal to a broader, slightly more value-conscious demographic. This will naturally make Casamigos more of an "affordable luxury" tequila, while Don Julio occupies the "luxury" slot.

In a move that would have been unthinkable five or 10 years ago, when Diageo was whipping the premiumization horse, Diageo is investing heavily in **Astral Tequila,** which occupies a much cheaper price point than either Don Julio or Casamigos. 

**Crown Royal net sales fell 15.9%.**  Diageo attributed this to "softness in **Crown Royal Deluxe** and lapping strong comparatives for **Crown Royal Blackberry** through fiscal 25.

Rounding out the grim news at Diageo, Scotch net sales declined 1.1%, with growth in both Johnnie Walker, up 1.0%, and single malts offset by Buchanan's, down 7.3%

**Two areas – RTDs and Cocktails – saw growth.**  RTDs/Cocktails net sales grew 35.1%, mainly driven by the successful launch of Casamigos RTS for the FIFA World Cup and growth in Casamigos RTD, as well as strong performance from **Bulleit** and **Ketel One Cocktails.**

**Diageo Beer Co. USA** net sales grew 4.4%, driven by growth in Guinness, led by Guinness Draught and Smirnoff RTD which grew mid-single-digits. reflecting continued investment and innovation, including **Smirnoff Sunny Days** and **Smirnoff Shorties**.

**Canadian net sales grew 7.7%**, supported by growth in **Guinness** and **Ketel On**e vodka and a one-off item relating to a favourable resolution of commercial terms with a customer.