Diageo slashes dividends as drinks giant struggles

By Hamish Graham

Published: 25 February, 2026

Diageo has unveiled its results for the first half of the financial year up to 31 December 2025, with the company reporting declining sales. Organic net sales were down 2.8% while it has set a new minimum floor for its dividend of 50 cent per year, which compares to the 103.48 US cents per share it paid out for FY25.

The decision to cut dividend payments is one that CFO at Diageo Nik Jhangiani said was not “taken lightly”. Much like fellow heavyweight Pernod Ricard’s recent H1 update (as reported by Harpers), the softening of demand in both China and the US has negated growth in other markets.

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Notably, as part of his inaugural results presentation, new CEO Dave Lewis was frank in his assessment of parts of Diageo’s performance: “Our customer service in the off-trade is frankly really very poor.

“I've shared with you here the customer service levels I experienced in North America, Latin America, and the UK, and they really are not acceptable. When we're looking for growth, the idea that we can't service the demand that's there is both a source of significant regret, but it's also an opportunity for us,” he added.

Nicknamed ‘Drastic Dave’, he is well known for his cost-cutting initiatives including cutting thousands of jobs while leading Tesco.

An example of this was seen in January when reports emerged that Diageo could sell its Chinese assets. It currently has a greater than 63% ownership stake in Sichuan Swellfun which produces the Shuijingfang baijiu brand.

Organic net sales in Greater China were down a precipitous 42%, with the firm detailing that this was primarily due to a 50.4% volume sales decline in the Chinese White Spirits category. A bevy of factors contributed to this category decline including an anti-waste introduced by its government, curbing spending on baijiu at state banquets and government events – an important sales channel for premium baijiu.

Additionally, vendors of baijiu have been selling top brands such as Moutai at cut prices to attract consumers to their ecommerce platforms. This could be reflective of a process termed ‘involution’ where intense internal market competitiveness between Chinese companies has driven down prices in a number of sectors.

Elsewhere in the Asian market, India saw good growth with organic net sales growing 8.7%, while travel retail in the continent grew 2% by the same metric. Sales declines were seen in other markets however, with Australia and Southeast Asia seeing falls.

In the US context organic net sales were down 9.3% in terms of spirits, though up 7.3% in terms of beer. Sales north of the US border rose 2.3%, with Canada helping offset slightly the 6.8% drop in organic net sales for North America.

Sales to Great Britain were comparatively better, rising 2.9% in terms of organic net sales, with Europe overall seeing a 2.7% increase. Turkey’s organic net sales lifted 26.2% but falls were seen in Iberia and Italy of 9.8% and 4%, respectively.

The Latin American and Caribbean market also got a sales boost of 4.5% in terms of organic net sales. Major market Brazil saw a 6.5% rise while Colombia jumped 16.9%.

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