Diageo recorded sluggish sales growth in the first quarter of its financial year as the drinks giant faced “competitive pressure” in its top markets.

The FTSE 100 group, which owns Guinness, Johnnie Walker and Tanqueray, recorded net sales up 1.2 per cent year-on-year at $4.9bn. But organic growth, which strips out currency volatility and the sale of East African Breweries to Asahi, came in at 0.6 per cent higher.

Sale volumes were also a touch lower falling 0.1 per cent for the July to September period. 

This was led by a drop in north America, which makes up 36 per cent of the group’s business. US sales dropped 3.7 per cent and volume fell by the same amount.

“In north America, we continue to focus on making our offer more competitive, and whilst this remains our biggest challenge, clear actions are underway,” Diageo boss Sir Dave Lewis said.

Sales of the group’s premium brands Don Julio and Casamigos plunged double digits in north America, while tequila broadly was down double-digit in Mexico. This was partially offset by double-digit growth in beer in the region and ready-to-drink canned cocktails.

Hot UK weather troubles Diageo beer sales

In Europe, Middle East and Africa (EMEA), which accounts for 26 per cent of the group’s business, organic sales grew 2.4 per cent driven by a 4.4 per cent rise in volumes.

Diageo sold 4.4 per cent more bottles in Europe, but earned two per cent less per bottle due to deliberate price cuts and promotions.

Beer sales saw low-single-digit growth in EMEA despite Guinness rising double-digits in Africa and Central Europe.

Diageo said this partly offset by low-single-digit decline in Britain and Ireland “due to unusually hotter weather and competitive pressure”.

Lewis took the reins at Diageo at the beginning of 2026 and quickly implemented a turnaround plan telling shareholders there was “hard work ahead” to boost sales.

The drinks giant shed around 2,000 jobs before the plan was formally kicked off with total headcount falling six per cent to 27,938 according to its annual report.

The group reported a three per cent dip in sales to $19.6bn in the year to end June, with profit tumbling by more than a fifth to just under $2bn.

But Lewis, who earned the name ‘Drastic Dave’ for his infamous turnaround effort at Tesco, vowed to deliver as much as $850m in cost savings.