Diageo reports fall of 1.5% in Q1 sales

The world’s largest spirits company Diageo reported a fall in sales of 1.5% for the first quarter of the year on the back of currency devaluations and weakened demand in China.

While sales remained stable in Africa and up 0.1% in the North American market, demand in Asia-Pacific; Europe and Latin America fell.

The most significant fall was in the Asia-Pacific market, down 7.4%, where net sales in China continued to struggle as a result of government-enforced austerity measures cracking down on gift-giving among officials.

Commenting on the figures contained in the company’s interim management statement, Diageo chief executive Ivan Menezes said that while sales had dipped in the first quarter, an increase in sales over the course of the year was expected. “In North America, consumer demand for mainstream brands is still constrained by weak consumer confidence in average income households... Western Europe is now stable and I continue to expect full-year performance to be flat although there will be quarterly fluctuations around that level.”

The Ukrainian conflict has been a drag on consumer confidence and sales in Europe, according to the company, while sales in western Europe were hindered by price increases in the Benelux countries: Belgium, the Netherlands and Luxembourg.