Key Takeaways Diageo's 1H26 EPS fell 2.5% as organic sales dropped 2.8% and North America remained weak.Tequila slid in the US, with Don Julio and Casamigos down double-digit on consumer downtrading.Diageo sees FY26 organic sales down 2-3% but reiterates $3B free cash flow guidance.Diageo plc (DEO) reported interim results for the first half of fiscal 2026, which ended Dec. 31, 2025, wherein pre-exceptional earnings per share declined 2.5% year over year to 95.3 cents. This was mainly due to reduced organic ...

Diageo (NYSE:DEO) H1 2026 Earnings call February 25, 2026 04:30 AM ET Company ParticipantsChris Pitcher - Head of Consumer Staples ResearchDave Lewis - CEOJames Edwardes Jones - Managing DirectorLaurence Whyatt - Managing DirectorMatthew Ford - VP of Equity ResearchMitch Collett - DirectorNik Jhangiani - CFOSonya Ghobrial - Global Head of Investor RelationsConference Call ParticipantsAndrea Pistacchi - Senior AnalystEdward Mundy - Managing Director and Senior Equity AnalystFintan Ryan - Consumer Equity Rese ...

Diageo (NYSE:DEO) H1 2026 Earnings call February 25, 2026 04:30 AM ET Company ParticipantsChris Pitcher - Head of Consumer Staples ResearchDave Lewis - CEOJames Edwardes Jones - Managing DirectorLaurence Whyatt - Managing DirectorMitch Collett - DirectorNik Jhangiani - CFOSonya Ghobrial - Global Head of Investor RelationsConference Call ParticipantsAndrea Pistacchi - Senior AnalystEdward Mundy - Managing Director and Senior Equity AnalystFintan Ryan - Consumer Equity Research AnalystGen Cross - Director and ...

Diageo (NYSE:DEO) H1 2026 Earnings call February 25, 2026 04:30 AM ET Speaker10Hello, everyone, thank you for joining the Diageo F26 Interim Results call. My name is Lucy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. It is now my pleasure to hand over to your host, Sonya Ghobrial, Global Head of Investor Relations, to begin. Please go ahead. ...

Chief Financial Officer Nik Jhangiani added that the board’s payout decision was influenced by a faster deterioration in U.S. spirits affordability than the company had expected. He said the company wanted “space and flexibility” to invest in the business and emphasized that management’s commitment to strong cash generation is unchanged. Jhangiani said the payout ratio range provides flexibility and indicated it would “probably” start toward the lower end of the range.On questions about whether the dividend ...

Diageo (NYSE:DEO) H1 2026 Earnings call February 25, 2026 02:05 AM ET Company ParticipantsDave Lewis - CEO and Executive DirectorNik Jhangiani - CFODave LewisGood morning, welcome to the Diageo Interim Results presentation. As you know, it's my first results session for Diageo. In fact, this is my seventh week. I'll share a few initial impressions and immediate priorities with you later. First, I'd like to hand over to Nik to share with you the results of the first half of 2026. Nik?Nik JhangianiThank you, ...

Diageo (NYSE:DEO) H1 2026 Earnings call February 25, 2026 02:05 AM ET Company ParticipantsDave Lewis - CEO and Executive DirectorNik Jhangiani - CFODave LewisGood morning, welcome to the Diageo Interim Results presentation. As you know, it's my first results session for Diageo. In fact, this is my seventh week. I'll share a few initial impressions and immediate priorities with you later. First, I'd like to hand over to Nik to share with you the results of the first half of 2026. Nik?Nik JhangianiThank you, ...

Core Thesis - Diageo plc is viewed positively by analysts due to its strong brand portfolio, strategic leadership under CEO Dave Lewis, and potential for transformation despite challenges in the alcohol industry [1][5][6] Company Overview - Diageo plc operates in the production, marketing, and distribution of alcoholic beverages across multiple regions including North America, Europe, Asia Pacific, Latin America, and Africa [2] - The company has over 200 globally recognized brands such as Johnnie Walker, Smirnoff, and Guinness [3] Financial Performance - Revenue increased from $15.2 billion in 2017 to $20.5 billion in 2022, but has stagnated at $20.24 billion in 2025 [3] - The stock has declined approximately 37% this year and is 60% below its peak in 2022 [3] Leadership and Strategy - Dave Lewis, the new CEO, brings 27 years of experience and aims to reinvigorate Diageo through cost-cutting and focusing on core growth areas [2][3] - The company is implementing cost-saving measures and strategic capital allocation, including the sale of its 65% stake in East African Breweries Limited for about $3 billion [4] Market Challenges - The primary challenge facing Diageo is the decline in per capita alcohol consumption, particularly in spirits, as consumers are drinking less [4] - Analysts expect continued rationalization of the brand portfolio and divestment of non-core assets to improve financial health [5] Investment Outlook - Diageo is considered an attractive entry point around $85, with a nearly 5% dividend yield and strong cash flow, presenting a favorable risk/reward scenario [5] - The company’s fundamentals and valuation remain compelling despite the broader challenges in the alcohol sector [6]

Core Insights - Sales of high-end tequila, particularly brands like Don Julio and Casamigos, have softened as consumers are opting for less expensive alternatives amid economic concerns [1][5][6] - The spirits industry is witnessing a significant decline in the sales of bottles priced at $100 or more, with an 18% drop reported in the last three months [3][8] - Consumers are increasingly "trading down" to more affordable options, indicating a shift in purchasing behavior due to economic pressures rather than health concerns [4][6][10] Industry Trends - The demand for premium spirits has decreased, with consumers prioritizing budget-friendly options as inflation and job market uncertainties loom [2][4] - Diageo's "super premium" tequila brands have experienced weakened sales, reflecting a broader trend in the spirits market [5][6] - The competitive landscape of the tequila category has intensified, leading consumers to consider alternatives like Astral, which is priced lower than traditional high-end brands [6][8]

Core Viewpoint - Costco is facing a class-action lawsuit for allegedly selling adulterated tequila that contains a significant presence of non-agave sugars, misleading consumers about the quality of its Kirkland Signature tequila products [1][2][3] Group 1: Lawsuit Details - The lawsuit was filed on November 14, 2025, in the U.S. District Court for the Western District of Washington, claiming that Costco's Kirkland Signature tequila is not pure agave as marketed [2] - Affected products include Kirkland Blanco Tequila, Reposado Tequila, Añejo Tequila, Añejo Cristalino Tequila, and Extra Tequila Añejo [2] - The lawsuit alleges that Costco's marketing is deceptive, as consumers are led to believe they are purchasing premium tequila at a premium price [4][5] Group 2: Market Context - Premium tequila sales have increased by 1,270% since 2003, with super-premium brands rising by 1,500% during the same period, indicating a growing consumer demand for high-quality tequila [5] - The definition of tequila is strictly regulated in the U.S. and Mexico, with specific standards for production, labeling, and marketing to prevent adulteration [6][7] Group 3: Scientific Evidence - Scientific testing, including nuclear magnetic resonance (NMR) and isotope testing, has revealed the presence of non-agave sugars in Kirkland tequila products, contradicting Costco's claims of "100% de Agave" [8] - The lawsuit claims that Costco's actions amount to violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and state consumer protection laws [8][10] Group 4: Regulatory Oversight - The Consejo Regulador Del Tequila A.C. (CRT) is responsible for ensuring compliance with tequila production standards, although it is a private non-profit organization rather than a governmental entity [9][10] - The CRT's board is reportedly dominated by representatives from well-known tequila producers, raising questions about its regulatory effectiveness [10]