Green shoots of restoration at Diageo as Guinness increase and World Cup fever offset weak spirits gross sales within the US

Diageo shares soared after it reported a surprise sales boost from customers stocking up on drinks ahead of the World Cup and the ongoing Guinness boom. 

The FTSE 100 group – which owns the stout as well as whisky brand Johnnie Walker and Smirnoff vodka – said sales rose 0.3 per cent in the three months to the end of March. 

Volumes also rose 0.4 per cent over the quarter – beating the City’s expectations for a 2.1 per cent fall in the quarter. 

It comes as a shot in the arm for new chief executive Dave Lewis, the former Tesco boss who has been tasked with a tough turnaround job. He told analysts there is ‘some real encouragement in a number of areas’.

Shares rose around 5 per cent to 1,545p on Wednesday morning – although they are still down 28 per cent over the past year. 

Lewis – who was nicknamed Drastic Dave after his cost-cutting at the supermarket – stepped into the job in January after the dramatic exit of his predecessor Debra Crew last year.

Diageo is hoping to reap the rewards of being the first official ‘spirits sponsor’ for the World Cup, which will include its flagship brands Casamigos, Don Julio, Buchanan’s, Johnnie Walker, and Smirnoff.

Popstar Dua Lipa is among the fans of Guinness, which has gained a new fan base among young women in recent years.

Lewis said: ‘I think the relationship of football, our brands, and all of the occasions that go with that feels like a very strong link.’

Finance boss Nik Jhangiani said he hopes sales in Latin America and North America will benefit from favourable match times as games are held across Canada, Mexico and the US this year.

Diageo’s surprise sales growth was boosted by its Europe, Africa and Latin America and the Caribbean divisions stocking up ahead of the Fifa tournament, which begins in June. 

Bosses said there continued to be strong momentum for Guinness, especially in Great Britain and Ireland.

Demand for the dark stout – which has gained traction among young women with famous fans including Dua Lipa and Olivia Rodrigo – helped boost sales in Europe by 8.8 per cent.

This helped to offset a 9.4 per cent decline in North America, which was hit by weak spirits sales.

‘North America remains our biggest challenge, where market conditions are soft and our offer needs to be more competitive,’ Lewis said. He said that ‘actions are already underway to address this.’

The brand still expects sales to fall 2-3 per cent in the 2026 financial year, blaming a weak consumer in the US.

It has previously said demand for its drinks in the US has been hit by ‘pressure on disposable income, and competitive pressure from more affordable alternatives addressing a more stretched consumer wallet.’

Susannah Streeter, chief investment strategist, Wealth Club, said: ‘Americans aren’t hitting premium brands in the same way, potentially due to trading down but also competition in the market from domestic names. It means that the full year still points to a contraction but with the tone a little more positive about the outlook, with cost savings on track, a glass half full attitude is starting to return.’

Lewis said he would provide a more detailed update on his strategy at a capital markets day in August. Investors are expecting to hear more about his plans for prices and brands within the group’s portfolio.

Lewis said on Wednesday that the brand had been ‘slow’ to capture a growth opportunity within ‘ready to drink’ canned cocktails and spirits.

There is a ‘very significant and profitable opportunity’ in this category, Lewis has previously said, especially as Diageo had ‘created this category with the launch of Smirnoff Ice circa 26 years ago.’

It comes amid fierce competition from new ‘ready to drink’ products, especially those offering a high percentage of alcohol, including BuzzBallz.