Beverage behemoth Diageo has issued a warning about the potential impact of Donald Trump’s tariffs on its business, which exceeded analysts’ expectations this year following a significant downturn last year.
The company's CEO, Debra Crew, stated that US tariffs, "whilst anticipated", could "impact [our] building momentum," and added that these levies have made it difficult for the company to forecast sales, as reported by .
Trump has vowed to impose 25 per cent tariffs on neighbouring Canada and Mexico – although he has since agreed to delay this for 30 days – and has already enforced a 10 per cent tariff on China.
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This is particularly relevant for Diageo, one of Mexico’s largest whiskey operators, which manufactures both Don Julio and Casamigos tequila in Mexico for sale in the US.
Crew noted that Diageo has "anticipated and planned for a number of potential scenarios regarding tariffs" and "are taking a number of actions to mitigate the impact and disruption to our business that tariffs may cause".
She further stated: "We will also continue to engage with the US administration on the broader impact that this will have on everyone supporting the US hospitality industry, including consumers, employees, distributors, restaurants, bars and other retail outlets."
On Radio 4’s Today show, AJ Bell investment director Russ Mould commented that Diageo’s are "looking at these tariffs very nervously."
He added: "The problem for the market is that they just don’t quite know what to expect".
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Charlie Huggins, manager of the quality shares portfolio at Wealth Club, commented on the market's current state: "The scale and breadth of Diageo’s portfolio means it is capable of meeting this challenge head on. It also has scope to accelerate productivity initiatives, which will now become even more important."
He added, "However, with Diageo’s CEO, Debra Crew, under mounting pressure to turn things around, the last thing she needed was more uncertainty. Trump’s tariffs cloud the outlook and are a major kick in the teeth for shareholders."
Jeffries analysts rated the stock a ‘Buy’ but similarly warned on the effect of tariffs. .
Diageo sales exceeded market expectations
The reported operating profit fell five per cent in the first half of the 2025 financial year, from $3.3bn (£2.66bn) in the first half of last year to $3.15bn (£2.54bn).
Reported net sales fell one per cent to $10.9bn, from $10.96bn last year. Organic sales rose one per cent, above analysts’ expectations of 0.5 per cent.
Earnings per share dropped 12 per cent to 87.1p. Diageo will pay an interim dividend of 40.5p on February 28.
Despite the contraction, this is an improvement in Diageo’s performance – profit fell nearly five per cent last year after sales in Latin America slumped. Sales of Scotch and rum, in particular, slowed down.
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"Our fiscal 25 first half results marked a return to growth, delivering organic net sales growth of one per cent despite a challenging industry backdrop as consumers continue to navigate through inflationary pressures," stated Chief executive Debra Crew.
"Growth in four of our five regions was supported by market share gains... we remain confident of favourable long-term industry fundamentals and more importantly in our ability to outperform the market," she added.
Diageo reported that its Guinness brand experienced double-digit growth for an eighth consecutive half.
At the end of January, rumours circulated that Diageo was planning to sell its Guinness division for up to £8bn, along with its 34 per cent stake in champagne producer Moet Hennessy.
However, Diageo dismissed these claims, stating it had "no intention" to sell either brand.
Guinness has been a significant contributor to the company's success, with 18 per cent growth last year bolstered by social media success and the younger generations’ rediscovery of the drink.
Last Christmas, some City pubs ran out of Guinness due to unprecedented demand over the festive period.