Drinks giant Diageo has announced a $500 million cost-saving program as it prepares to absorb an estimated annual hit of €133 million from US tariffs. The maker of Guinness and Johnnie Walker revealed it expects to mitigate approximately half the impact through existing plans and is developing additional measures to offset the remaining costs.
The company’s outlook has actually improved since February, when it had projected a larger €178 million profit impact from tariffs. Diageo received a reprieve when alcoholic beverages were exempted from proposed tariffs on US imports from Canada and Mexico in March.
The London-listed firm plans to transition to “a more agile global operating model” as part of its strategy to improve cash flow and support further investments.
Despite these challenges, Diageo reported positive financial news with net sales growing by 2.9% to €3.89 billion for the quarter ending March 31, bolstered by strong Guinness performance. While European sales dipped 1.3% with weaker spirits demand across key markets, North American sales grew 5.9% thanks to robust US spirits shipments.
CEO Debra Crew expressed confidence in the company’s trajectory, stating, “We continue to believe in the attractive long-term fundamentals of our industry and in our ability to outperform the market.” She acknowledged ongoing uncertainty but indicated Diageo is on track to deliver sequential improvement in organic sales performance in the second half of fiscal 2025.