Industrywide, the number of $100-plus bottles sold has fallen 18% in the past three months, according to the market research firm NielsenIQ. Why This News Matters to Investors Don Julio and other high-end tequila sales have softened, Diageo PLC said. Kevin Carter / Getty Images Close Key Takeaways Fewer booze buyers are reaching for the top shelf. Americans aren't thirsting for for the high-end tequila that once flowed freely, spirits companies said, as demand for $100 spirits has dropped off. Consumers app ...

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]

Core Viewpoint - Jim Cramer expresses skepticism about Diageo plc (NYSE:DEO), stating that the appointment of a new CEO is unlikely to improve the company's fortunes due to ongoing challenges in the alcoholic beverage industry [2][3]. Company Analysis - Diageo plc has appointed Sir Dave Lewis as its new CEO, but Cramer believes that leadership changes will not resolve the fundamental issues facing the company [2][3]. - The alcoholic beverage industry is currently facing significant challenges, with Cramer highlighting that "liquor's the most challenged product in the world" [3]. Industry Context - Cramer notes that even popular products like agave spirits are experiencing declines, attributing this to quality issues and additives [3]. - The overall sentiment in the alcoholic beverage sector is negative, with Cramer indicating that "there isn't anything that is going right in the liquor business right now" [3].

Core Viewpoint - Diageo has appointed Sir Dave Lewis as the new CEO, concluding the search for a successor after Debra Crew's departure in July. Lewis will officially take on the role in January 2026, with interim CEO Nik Jhangiani leading the company through December [1][2]. Leadership Changes - Sir Dave Lewis, former CEO of Tesco, has extensive experience in leading major brands and will bring his leadership skills to Diageo. He has also chaired Haleon and serves as a non-executive director at PepsiCo [2][3]. - Deirdre Mahlan will continue to support the transition as interim CFO, having returned to the role in July [2]. Market Outlook - Lewis acknowledges the challenges in the market but also sees significant opportunities for Diageo. He aims to work with the team to create shareholder value [3][4]. - Diageo recently revised its sales and profit guidance, expecting organic net sales growth to be flat to slightly down, influenced by the Chinese white spirits market and a weaker US consumer environment [4][5]. Financial Performance - For the fiscal first quarter, Diageo reported flat organic net sales, with a 2.2% decline on a reported basis to $4.9 billion. The North America business saw a 2.7% decline in organic net sales, amounting to $1.84 billion, impacted by a challenging consumer goods environment [5][6].

Financial Data and Key Metrics Changes - In Q1, organic net sales were flat, with reported net sales of $4.9 billion down 2.2% year-over-year, primarily impacted by the disposal of Guinness Nigeria and the Shiraz North America transaction [8][9] - Organic volume growth was 2.9%, offset by a negative price mix of 2.8%, largely due to the adverse impact of Chinese white spirits [8][9] - The company updated its fiscal guidance, now expecting organic net sales growth to be flat to slightly down for the fiscal year, with organic operating profit growth projected in the low to mid-single-digit range [15][17] Business Line Data and Key Metrics Changes - North America saw organic net sales decline by 2.7%, with U.S. spirits down 4.1%, while Diageo Beer Company grew by 9.2% [9][10] - Europe experienced organic net sales growth of 3.5%, driven by strong performance in Guinness Draught and spirits, particularly in Turkey and the Middle East [10][11] - Asia-Pacific faced a 7.5% decline in organic net sales, primarily due to reduced consumption of Chinese white spirits, which negatively impacted regional sales by approximately 13% [10][11] Market Data and Key Metrics Changes - In LAC, organic net sales grew by 10.9%, led by strong performance in Brazil, while Africa reported 8.9% organic sales growth, with broad growth across East Africa and Southwest and Central Africa [11][12] - The tequila category in North America is experiencing increased competitive pressure, with a decline in overall category growth from 10% in 2023 to just under 3% [32][35] - The company noted a shift in consumer behavior, with consumers trading down from super premium to premium products, impacting sales of Don Julio and Casamigos [35][36] Company Strategy and Development Direction - The company is advancing its "Accelerate" program to strengthen its foundations for long-term sustainable growth, with a focus on cost efficiency and process simplification [12][18] - Management is committed to improving operating leverage and enhancing commercial execution, particularly in key markets [13][15] - The company is exploring selective disposals of non-core assets to focus on growth opportunities in RTDs and brand activation during major events like FIFA 2026 [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed concern over current performance, particularly in North America, and emphasized the need for urgent actions to drive growth [5][6] - The economic environment is weighing on consumer sentiment, leading to weaker-than-expected results in the U.S. [9][15] - Despite challenges, management remains confident in delivering $3 billion in free cash flow for fiscal 2026, supported by ongoing initiatives [12][17] Other Important Information - The company is implementing a clearer decision-making framework to enhance speed and agility in operations [14][15] - Management highlighted the importance of maintaining brand equity while optimizing marketing spend across different markets [56][59] Q&A Session Summary Question: Insights on U.S. spirits performance and guidance - Management acknowledged the complexity of U.S. spirits performance, noting a decline in depletions and the impact of tariff-related pre-buys [21][22] Question: Competitive pressure in the tequila market - Management discussed increased competition in the tequila category, emphasizing the need for strategic interventions to improve performance [31][32] Question: EBIT guidance and margin support - Management expressed confidence in achieving low to mid-single-digit EBIT growth despite market challenges, citing cost efficiencies and stronger whiskey performance [45][47] Question: Impact of A&P reductions - Management clarified that A&P reductions in GB were part of a broader strategy to optimize marketing spend while maintaining brand equity [55][56] Question: Accelerate program details - Management provided insights into the Accelerate program, highlighting its role in driving efficiencies and improving resource allocation [63][66]

Financial Data and Key Metrics Changes - In Q1, organic net sales were flat, with reported net sales of $4.9 billion down 2.2% year-over-year, primarily due to the disposal of Guinness Nigeria and the Shiraz North America transaction [5][8][9] - Organic volume growth was 2.9%, offset by a negative price mix of 2.8%, largely due to the impact of Chinese white spirits [8][9] - The company updated its fiscal guidance, now expecting organic net sales growth to be flat to slightly down for the fiscal year, with organic operating profit growth projected in the low to mid-single-digit range [15][17] Business Line Data and Key Metrics Changes - North America saw organic net sales decline by 2.7%, with U.S. spirits down 4.1%, while Diageo Beer Company grew by 9.2% [9][10] - Europe experienced organic net sales growth of 3.5%, driven by strong performance in Guinness Draft and spirits, particularly in Turkey and the Middle East [10][11] - Asia-Pacific reported a 7.5% decline in organic net sales, primarily due to reduced consumption of Chinese white spirits [10][11] Market Data and Key Metrics Changes - In North America, the tequila category faced increased competitive pressure, leading to a decline in sales, while Scotch and ready-to-drink products showed strong growth [9][10][32] - Latin America (LAC) reported a robust organic net sales growth of 10.9%, led by double-digit growth in Brazil [11] - Africa saw organic sales growth of 8.9%, with broad growth across East Africa and Southwest and Central Africa [11] Company Strategy and Development Direction - The company is advancing its "Accelerate" program to strengthen its foundations for long-term sustainable growth, with a focus on cost efficiency and commercial execution [12][19] - There is a clear strategy to improve operating leverage and enhance decision-making frameworks across the organization [14][15] - The company is committed to returning to its target leverage ratio range of 2.5-3 times by fiscal 2028, supported by selective disposals [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging operating environment, particularly in the U.S. and Asia-Pacific, and emphasized the need for urgency in driving growth [5][6] - The management expressed confidence in achieving $3 billion in free cash flow for fiscal 2026, supported by ongoing cost management initiatives [12][17] - There is a focus on adapting to changing consumer preferences, particularly in the spirits category, and leveraging opportunities in ready-to-drink products [19][84] Other Important Information - The company is experiencing a shift in consumer behavior, with a trend towards smaller sizes and lower-priced products, particularly in the tequila category [32][36] - The management is actively addressing legal challenges related to tequila credentials, ensuring consumer confidence in product quality [43] Q&A Session Summary Question: Insights on U.S. spirits performance and guidance - Management noted that U.S. spirits declined 4.1% in Q1, with some benefits from tariff pull-forwards and highlighted the need to monitor consumer takeoff closely [21][22][23] Question: Competitive pressure in the tequila market - Management acknowledged increased competition in the tequila category and discussed strategies to improve performance for brands like Don Julio and Casamigos [31][32][34] Question: EBIT guidance and margin support - Management expressed confidence in achieving low to mid-single-digit EBIT growth despite challenges, citing cost efficiencies and stronger whiskey performance as key factors [46][48][49] Question: A&P spend reduction and efficiency - Management clarified that A&P development spend was reduced by optimizing agency use and reallocating resources for better returns [57][58][61] Question: Accelerate program and savings - Management confirmed that 40% of the savings from the Accelerate program would be delivered this fiscal year, emphasizing the importance of effective resource allocation [65][66][68]

Financial Data and Key Metrics Changes - In Q1, organic net sales were flat, with reported net sales of $4.9 billion down 2.2% year-over-year, primarily impacted by the disposal of Guinness Nigeria and the Shiraz North America transaction [6][7][10] - Organic volume growth was 2.9%, offset by a negative price mix of 2.8%, largely due to the adverse impact of Chinese white spirits [6][10] - The company updated its fiscal guidance, now expecting organic net sales growth to be flat to slightly down for the fiscal year, with organic operating profit growth projected in the low to mid-single-digit range [13][16] Business Line Data and Key Metrics Changes - North America saw organic net sales decline by 2.7%, with U.S. spirits down 4.1%, while Diageo Beer Company grew by 9.2% [7][10] - Europe experienced organic net sales growth of 3.5%, driven by strong performance in Guinness Draft and spirits, particularly in Turkey and the Middle East [9][10] - In Asia-Pacific, organic net sales declined by 7.5%, significantly affected by the downturn in Chinese white spirits, which impacted regional net sales by approximately 13% [9][10] Market Data and Key Metrics Changes - Latin America and Caribbean (LAC) reported organic net sales growth of 10.9%, led by strong performance in Brazil [10] - Africa showed organic sales growth of 8.9%, with broad growth across East Africa and Southwest and Central Africa [10] - The tequila category in North America faced increased competitive pressure, leading to a decline in overall performance [29][30] Company Strategy and Development Direction - The company is focused on sharpening its strategy and implementing initiatives to drive growth across its portfolio, particularly through the Accelerate program [5][11] - There is an emphasis on improving commercial execution and optimizing trade spend, with a commitment to delivering $3 billion in free cash flow for fiscal 2026 [11][16] - The company is also exploring selective disposals of non-core assets to enhance focus on core growth areas [17] Management's Comments on Operating Environment and Future Outlook - Management expressed concern over the current performance, particularly in North America, and acknowledged the need for urgent actions to drive growth [4][5] - The economic environment is weighing on consumer sentiment, leading to a cautious outlook for the U.S. market [7][10] - Management remains confident in the long-term growth potential of the portfolio, particularly in RTDs and Guinness [17][18] Other Important Information - The company is making progress on cost efficiency and process simplification, which are expected to contribute positively to margins [11][48] - The impact of foreign exchange on reported sales was negligible during the quarter [6] - The company is committed to returning to its target leverage ratio range of 2.5-3 times by fiscal 2028 [16] Q&A Session Summary Question: Insights on U.S. market performance and guidance - Management acknowledged the complexities in the U.S. market, noting that net sales were ahead of depletions, with depletion NSV down about 7% [20][22] - The impact of tariff pre-buying and seasonality was discussed, with management indicating that the unwinding of these factors would not be material in Q2 [24][25] Question: Competitive pressure in the tequila category - Management highlighted increased competitive pressure in the tequila category, with consumers trading down and shifting preferences impacting performance [28][30] - The company is focusing on its portfolio, particularly Don Julio and Casamigos, to adapt to changing consumer behaviors [30][32] Question: EBIT guidance and margin support - Management expressed confidence in delivering low to mid-single-digit EBIT growth despite challenges, citing cost discipline and operational efficiencies as key factors [44][46] - Input costs, particularly for agave, were noted but not seen as a major factor in efficiencies [51][52] Question: A&P spend reduction and efficiency - Management clarified that A&P development spend was reduced by optimizing agency use and reallocating resources for better returns [56][58] - The focus remains on maintaining brand equity while improving marketing efficiency across markets [58][59] Question: Details on the Accelerate program - Management provided insights into the Accelerate program, emphasizing its role in driving savings and improving operational effectiveness [61][64] - The program aims to enhance decision-making speed and resource allocation across the organization [64][65] Question: Margin and operating leverage - Management confirmed that 40% of savings from the Accelerate program would be realized this year, ahead of previous guidance [69][70] - The impact of depletions and consumer behavior in North America was discussed, with management indicating that these factors would be managed throughout the year [71][74]

Core Viewpoint - The World Class competition, now in its 16th year, showcases the best bartenders from 51 countries, highlighting the global cocktail culture and recognizing exceptional talent in the industry [1][3]. Group 1: Competition Highlights - Felice Capasso from Norway won the title of "2025 World Class Global Bartender of the Year" at the prestigious cocktail competition held in Toronto [3]. - The competition featured participants from six continents, with Capasso standing out through a series of innovative cocktail creations [3][4]. - Capasso's achievements include a trophy, a free trip to the global finals next year, mentorship from industry leaders, and opportunities to guest bartend at top bars [3][4]. Group 2: Challenges and Innovations - During the competition, Capasso participated in various challenging events, including the Johnnie Walker Black Label innovation challenge, where he creatively modified a classic gin recipe [4]. - He drew inspiration from an original AI artwork for a tequila aperitif in the Don Julio 1942 challenge, showcasing his ability to blend art and mixology [4]. - Capasso's cocktail "Between Us" was inspired by the classic song "That's Amore," demonstrating his unique approach to creating sensory experiences [4]. Group 3: Industry Impact - The World Class platform aims to honor the core strengths of the bar service industry and has supported the professional development of over 450,000 bartenders globally [6][10]. - The judging panel consisted of renowned bartenders and industry leaders, emphasizing the competition's credibility and the high standards of evaluation [6][7]. - The event serves as a celebration of creativity and passion within the bartending community, inspiring new generations of talent [7]. Group 4: Company Background - Diageo, the parent company of the World Class competition, is a global leader in the alcoholic beverage industry, with a portfolio of well-known brands including Johnnie Walker, Smirnoff, and Guinness [11]. - Diageo operates in nearly 180 countries, emphasizing responsible drinking and promoting a culture of quality over quantity in beverage consumption [11][10].

Core Insights - Diageo Plc (DEO) shows resilience in a challenging macroeconomic environment, achieving modest organic growth with a 1.7% year-over-year increase in organic net sales and earnings in line with guidance despite foreign exchange headwinds and overhead investments [1][10] - Key brands driving growth include Don Julio, Guinness, and Crown Royal, with tequila and scotch leading premiumization trends [1][10] Innovation and Market Reach - DEO is expanding its product offerings through innovation, including the launch of Guinness 0.0, new Johnnie Walker variants, and entry into ready-to-drink (RTD) and non-alcoholic categories, targeting younger consumers and capitalizing on global moderation and premiumization trends [2] Cost Management and Efficiency - To combat margin pressure, Diageo is implementing its Accelerate program, aiming for $625 million in savings over three years by streamlining operations and enhancing trade spend efficiency, while also investing in digital capabilities and consumer data analytics to strengthen long-term competitiveness [3] Financial Performance and Strategy - The company's free cash flow reached $2.7 billion in fiscal 2025, with a commitment to generate $3 billion annually from fiscal 2026, providing flexibility to sustain dividends and fund selective innovation despite near-term volatility [4] Market Challenges - Significant macro headwinds persist, including consumer moderation trends, cautious U.S. demand, currency volatility, and potential U.S. tariffs, which may constrain near-term earnings momentum [5] - While Diageo's spirits-led growth strategy and premium brand strength position it for long-term outperformance, investors must consider the cyclical pressures that may limit short-term upside [5]

Core Insights - Diageo plc reported a decline in pre-exceptional earnings per share by 8.6% year over year to 164.2 cents, primarily due to lower contributions from Moët Hennessy and adverse currency effects [1][8] - Net sales decreased by 0.1% year over year to $20.2 billion, impacted by unfavorable currency effects and adjustments from acquisitions and disposals, despite improved organic sales [2][8] Financial Performance - Organic net sales increased by 1.7% year over year, supported by a 0.9% growth in organic volume and a 0.8% improvement in price/mix [3] - The reported operating profit fell by 27.8% year over year to $4.3 billion, influenced by exceptional impairment and restructuring charges, unfavorable currency movements, and a contraction in organic operating margin [9] - Organic operating profit decreased by 0.7% year over year, with a reported operating margin contraction of 819 basis points [10] Regional Performance - Volume declined in North America and Europe due to a cautious consumer environment, while volume gains were observed in the Asia Pacific, Africa, and Latin America [4] - North America experienced positive price/mix contributions driven by tequila, particularly aged variants, while Europe saw growth from Guinness [5] Future Outlook - Diageo anticipates organic net sales for fiscal 2026 to be broadly in line with fiscal 2025, with growth expected to be weighted towards the second half of the fiscal year [13] - The company forecasts mid-single-digit growth in organic operating profit for fiscal 2026, primarily driven by cost savings under its Accelerate Program [14] - Capital expenditures are projected to be between $1.2 billion and $1.3 billion, with free cash flow expected to reach $3 billion [15]