Net sales at Diageo declined by 4% to $10.5bn, according to the interim results released today, covering the six months ending 31 December. 

At the same time, organic net sales were down 2.8% and organic volume dipped by 0.9%. 

The company said that this was impacted by a soft performance in North America, where reported net sales declined by 7.4%, with an especially sharp drop in the tequila category due to increased competition. 

Asia Pacific (APAC) likewise saw an overall fall, with reported net sales down by 13%, led by a 42.3% decline in China, offset by 8.7% growth in India. 

At the same time, however, Diageo reported strong net sales growth in Europe, with an increase of 4.9%. Within this, sales in Great Britain grew by 2.9%, with especially good results from Guinness and Guinness 0.0. 

Latin America and the Caribbean (LAC) also saw positive reported net sales growth of 6.3%, with sales in Brazil increasing by 6.5%, Mexico by 1.6% and the Caribbean, Central America and Venezuela by 2.8%. 

Finally, Africa saw mixed results, with reported net sales declining by 7.5% but organic operating profit increasing by 23%, reflecting positive price mix. East Africa also saw net sales growth of 9.4%. 

Elsewhere, free cash flow decreased by $164m to $1.5bn, and net debt hit $21.7bn. 

The company did, however, note that it expected to see an influx of proceeds following the sale of East African Breweries plc and its shareholding in the Kenyan spirits business, which will be transferred to Asahi Group Holdings. 

Sir Dave Lewis, CEO at Diageo, said: “Our performance in the first half of fiscal 26 was mixed. Strong performance in Europe, LAC and Africa, was offset by a weakening performance in NAM and continued weakness in Chinese white spirits in APAC.  

“US Spirits performance reflected pressure on disposable income, and competitive pressure from more affordable alternatives addressing a more stretched consumer wallet.”