Johnnie Walker, Casamigos parent company posts first annual sales decline since 2020

The world's top spirits maker Diageo reported its first annual sales decline in four years amid sliding sales in Latin and North America and cited a "cautious consumer environment."

The world's top spirits maker Diageo posted its first decline in annual sales in four years on Tuesday, with the loss led by sliding sales in Latin America and North America.

The London-based parent company of more than 200 brands — including Johnnie Walker whisky, George Clooney and Randy Gerber's Casamigos tequila, Guinness stout beers, Crown Royal Canadian Whiskey and Smirnoff vodka — had sales decline by 0.6% overall, while sales in the Latin America and Caribbean region fell by 21.1%.

Diageo's operating profit fell by 4.8% for the fiscal year to $6 billion amid the declines in the North American and Latin American and Caribbean (LAC) markets.

"The main driver was materially weaker performance in LAC, our Latin America and Caribbean region, which makes up 8% of Diageo's organic net sales," the company wrote in its preliminary annual results report. 

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"Organic net sales in our largest region, North America or NAM, also declined, reflecting a cautious consumer environment compounded by the impact of lapping inventory replenishment in the prior year," Diageo explained.

Diageo said that it has "dramatically reduced" inventory to more appropriate levels in Mexico, its second-largest market in the Latin America and Caribbean region. 

However, the company noted that "this market continues to face persistent challenges with a highly competitive environment and consumer downtrading in tequila and scotch."

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The company said it "grew or held total market share in over 75% of total net sales in measured markets, including in the U.S.," according to its internal estimates based on data from several market analytics providers.

Diageo CEO Debra Crew went on to say that, "While fiscal 24 was a challenging year for both our industry and Diageo with continued macroeconomic and geopolitical volatility, we focused on taking the actions needed to ensure Diageo is well-positioned for growth as the consumer environment improves."

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Crew said the company is taking action to "manage the inventory issues in LAC" while also strengthening the company's consumer insights and redeploying resources towards the "best growth opportunities."

Diageo's stock declined by 4.7% during Tuesday's trading session. It's down over 12.9% year to date and more than 28.7% in the past year.

Reuters contributed to this report.