Diageo has announced 5.9% organic net sales growth for its fiscal 2025 third quarter, reaching $4.4 billion and surpassing analyst expectations of 2.9% growth.

The performance was driven by strong volume growth of 2.8% and a favourable price/mix of 3.1%, despite challenges from tariffs and macro-economic uncertainties.

The drinks giant highlighted significant contributions from North America, Latin America and Caribbean regions. In North America, organic net sales benefited from a pull-forward of imported shipments in anticipation of tariffs, alongside continued tequila restocking driven by strong consumer demand for Don Julio.

Latin America and Caribbean saw double-digit organic net sales growth, fuelled by a soft comparative period marked by significant de-stocking in Q3 fiscal 2024.

The company’s iconic Guinness brand continued its stellar performance, posting double-digit organic net sales growth, propelled by Guinness Draught and the non-alcoholic Guinness 0.0.

Tariff impacts

Its tequila portfolio, led by Don Julio and Casamigos, also contributed to growth, though overall spirits organic net sales saw a slight decline due to market-specific challenges.

In Asia Pacific, organic net sales grew 2%, supported by favourable comparatives and continued growth in India, tempered by inventory de-stocking in Travel Retail Asia and the transition to a Guinness licence brewing model in Australia and New Zealand.

Diageo CEO Debra Crew emphasised the company’s resilience in navigating a volatile operating environment. “In the third quarter, we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal 25,” she said.

Source: Diageo.

To address an estimated $150 million annualised tariff impact, particularly in the US, Diageo is taking proactive measures, which include engaging with the US administration to mitigate disruptions to the hospitality industry.

Diageo also unveiled its ‘Accelerate’ plan, a $500 million cost-cutting programme aimed at enhancing cash flow and operational efficiency.

The company reaffirmed its full-year guidance, expecting sequential improvement in organic net sales growth in the second half of fiscal 2025 compared to the first half.

However, Diageo anticipates a slight decline in organic operating profit due to tariff impacts and other market pressures.

Despite near-term challenges, Diageo remains optimistic about the long-term fundamentals of the total beverage alcohol (TBA) market, driven by a growing middle class, increased spirits penetration, and premiumisation trends.

The company said its focus on premium and super-premium brands, such as Johnnie Walker and Don Julio, positions it to capitalise on these opportunities.