Whisky producer Diageo suffers further sales slide

● But global drinks giant sees signs of slow return of business as China reopens

largest whisky producer has warned that the speed of the global shutdown as governments attempt to limit the spread of Covid-19 is hitting the business even harder than before.

Bosses at drinks giant Diageo, whose vast portfolio includes Johnnie Walker whisky, Guinness stout and Smirnoff vodka, highlighted several areas which have worsened in the past month following widespread lockdowns around the world.

They also put on hold a share buyback scheme aimed at boosting the share price and stopping all non-essential advertising and promotional spending for the company’s brands, which also include Captain Morgan and Baileys.

But the group said it was donating alcohol to make more than eight million bottles of sanitiser for frontline healthcare workers around the world, while providing support packages for bartenders and others impacted by closures.

In an update released to the stock market, the firm told investors: “Widespread containment actions put in place by governments across the globe in March, including the closure of bars and restaurants, are having a significant impact on the performance of our business.

“Social distancing measures, including the closure of the on-trade channels, have been introduced in most of our markets. We are tracking changes in consumer behaviour during this time and adjusting our plans and resources in response.”

In Europe, Diageo revealed that around half of all sales on the continent are from pubs, bars and restaurants. But with the UK and others closing venues, this has now collapsed.

There has been a boost in sales through supermarkets, but this was cautioned with questions over whether it can be sustained longer term.

Elsewhere the firm noted: “In mainland China, we are beginscotland’s ning to see a very slow return of on-trade consumption, as restaurants and bars have started to gradually reopen.

“The significant impact on global travel retail, referred to in our 26 February update, has extended beyond Asia Pacific into other markets in March due to a steep drop in passenger numbers, as well as new travel restrictions imposed by many countries.”

Sales have also taken a dive in North America, India and two production sites in Nigeria have been shut.

Chief executive Ivan Menezes said: “During this challenging time, our top priority is to safeguard the health and wellbeing of our people, while taking necessary action to protect our business. I am confident in Diageo’s long-term strategy and our ability to move quickly in this difficult environment.

“We will continue to execute with discipline and invest prudently to ensure we are strongly positioned for a recovery in consumer demand. I am proud of the resilience and commitment of our people as they work hard to support our partners, customers and communities.”