Trump’s tariffs and a shrinking market for alcohol deal double blow to Diageo

More bad news for drinks giant Diageo, says Jessica Newman in The Times. It has announced that the spectre of US tariffs and uncertainty in many of its markets had forced it to jettison a longstanding revenue growth target. Since 2021, the world’s largest producer of spirits has been targeting yearly organic sales growth of between 5% and 7% over the medium term. However, while the tariffs on goods imported to the US from Mexico were delayed by a month at the last minute, the company says the chance they may yet be imposed “adds further complexity” to its ability to predict future trading.

Diageo is right to be “cautious”, says eToro’s Adam Vettese. After all, the company is particularly exposed to the “spectre of tariffs” given that it imported $1.6 billion worth of tequila into the US last year. While Diageo has said it will take measures to temper the impact of 25% tariffs, there is a limit to what cost-cutting and inventory management can do when faced with such a “mammoth additional expense”. Although Diageo’s shares have struggled in recent months, “it’s difficult to bet against the price falling even further” if Trump follows through.

Diageo’s toxic cocktail