Diageo punts on sales guidance as potential tariffs loom
Casamigos, Don Julio, and Crown Royal may be subject to tariffs later this year.
British liquor giant Diageo told investors on Tuesday that it can’t give them a sales outlook because of the looming risk of tariffs in North America on some of its most popular products.
President Trump had said the US would impose 25% tariffs on goods from Mexico, where Diageo imports its Don Julio and Casamigos, and Canada, where its Crown Royal whiskey is made. The tariffs were postponed by a month, which gives Diageo temporary peace of mind but little room to predict what may be in store for the rest of the year.
Many popular liquors are considered distinctive products, meaning they have to be made in specific regions. For Diageo, that means Don Julio, Casamigos, and Mezcal Unión have to be made in Mexico and Crown Royal has to be made in Canada.
About 45% of Diageo’s US net sales consists of products made in either Canada or Mexico, Manik H. Jhangiani, the company’s chief financial officer, has said. Overall, the tequila and Canadian whiskey business made up 13% and 6% of sales, respectively, in the second half of 2024.
The threat of tariffs is also hitting Diageo at a particularly inopportune time: sales growth in North America and Latin America has slowed as younger consumers are drinking less alcohol than other generations. Tequila sales were actually one area where Daigeo was able to capture growth. Guinness was, too.
Diageo, realizing that Americans are increasingly flocking toward Mexican booze, bought Don Julio in 2014 and Casamigos in 2017. Casamigos — the more affordable of the two — boomed in popularity, but as competitors have emerged, its sales have slipped in the past year and half. Don Julio sales, meanwhile, have remained steady.
Crown Royal has been owned by Diageo since 2000. As a product American consumers adopted earlier than tequila, its sales growth has been steadier by comparison.
