Diageo sales slide on back of poor demand

Diageo, the world's largest spirits maker, reported slower quarterly trading on Thursday, hurt by flagging global demand and the after effects of a weak economic recovery.

The maker of Johnnie Walker whisky, Smirnoff vodka and Guinness beer, said net sales in the three months to March 31, the third quarter of its financial year, fell 0.7pc.

The quarterly report is the last of its kind for Diageo, which will do only half-year reporting from next financial year.

Sales fell 0.2pc in the six months to the end of December.

Analysts were hoping for signs of improvement in the United States, Diageo's largest market for profit, especially after more positive industry data from Nielsen.

Ivan Menezes, chief executive of Diageo said: "Our performance in the quarter reflects continued tough conditions in the emerging markets and subdued consumer demand in some developed markets."

"We will continue to strengthen Diageo. We are investing in our brands, enhancing our route to consumer, introducing great innovations such as Crown Royal Regal Apple and Orijin."

In January, Diageo's chief financial officer said the company was not yet feeling the benefit of an improving economic picture but hoped to soon, as lower fuel prices meant more money to spend on extras such as alcohol.

For its weaker performance, the company blamed a high single-digit sales decline in Britain, due to a tough comparison with last year that saw a buy up ahead of an expected duty increase, regulatory changes in Indonesia and retailers keeping less inventory in Southeast Asia.