Hopes for a Diageo revival under new CEO Dave Lewis were ignited on Wednesday, after third quarter results trounced City expectations.
City traders leaped to buy the stock after group organic revenues rose 0.3% in the three months to 31 March 2026 – easily beating analysts’ predicted drop of 2.3%. The spirits giant’s share price jumped 5.7% to 1,568p in the day’s trading, building on gains made since the stock hit a five-year low of 1,362p in late March.
The positive results arrived after a grim set of first-half results in February, when Lewis slashed Diageo’s financial outlook and cut dividends.
Yet while the group enjoyed extraordinary organic sales growth in Africa (up 17.1%) and Latin America (16.2%) and a strong Guinness-led revival in Europe (8.8%), the US remains the company’s “biggest challenge”, according to Lewis.
Sales in North America fell 9.4% on an organic basis – better than expected, but enough to keep group sales nearly flat when factored alongside the 0.8% decline in the Asia Pacific region.
“US spirits remain in freefall, if anything worse in Q3 than H1,” Bernstein analyst Trevor Stirling said. Rival Pernod Ricard’s growth was about four points ahead in the region, he added.
Investors were nevertheless heartened by assurances that Lewis has a plan to fix the group’s finances. He told investors “actions are already underway” to make its US spirits offering more competitive.
Diageo will unveil a full turnaround strategy in early August. Investors will hope it marks the “end of the downgrade cycle and the start of the recovery phase”, Jefferies analyst Edward Mundy said. “We see Lewis bringing a fresh lens to rebooting growth and driving stronger operational rigour.”
Growth will rely on higher volumes – and cheaper prices, Laurence Whyatt of Barclays added. “Competitiveness remains Diageo’s core near-term priority,” he said.
Positive momentum should continue thanks to an expected boost from the football World Cup – with Diageo signed up as the competition’s first spirits sponsor.
RBC’s James Edwardes Jones said it was early days, but the results provided hope that actions were underway to fix issues in North America.
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