Diageo, the maker of Guinness stout and Johnnie Walker whisky, scrapped Tuesday a key sales target with President Donald Trump’s tariff plans set to sour its US sales of tequila.
The British group, whose brands include also Smirnoff vodka, Baileys liqueur, and Captain Morgan rum, has in recent times been impacted by inflation-suffering consumers swapping its premium brands for cheaper beverages.
In an update Tuesday, Diageo said that “given the current macroeconomic and geopolitical uncertainty in many” key markets, medium-term guidance for organic net sales growth of 5-7 percent had been axed.
Trump’s moves to slap levies on imports from Canada, China, and Mexico — while threatening to do the same across Europe — adds “complexity in our ability to provide updated forward guidance”, Diageo chief executive Debra Crew said in a statement that revealed a fall in first-half net profit.
She added that Diageo is engaging with the Trump administration on the broader impact that the tariffs “will have on everyone supporting the US hospitality industry”.
Trump on Monday delayed the start of tariffs on Mexico and Canada for a month — but China remained in the firing line for levies that are putting the global economy on edge.
China retaliated Tuesday, announcing that it would impose tariffs on imports of US energy, vehicles, and equipment.
Diageo said the tariffs would hit its tequila portfolio, given it must be made in Mexico, as well as Canadian whisky.
It added Tuesday that group net profit slid 12 percent to $1.9 billion in its first half or six months to the end of December.
Sales dipped one percent to $10.9 billion compared with one year earlier.
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