MW Tequila has to be made in Mexico. Diageo offers no financial outlook on tariff uncertainty.

By Steve Goldstein

The maker of Don Julio tequila and Crown Royal whisky said on Tuesday it can't provide financial guidance because of the uncertainty over tariffs.

Diageo, the alcoholic beverage conglomerate, said even with the 30-day delay from the U.S. in imposing 25% tariffs on Canada and Mexico it still can't be sure of what will happen.

"Diageo starts from a position of strength with a broad global portfolio across categories and geographies, and has demonstrated agility in navigating tariffs on input costs in the past. However, in the U.S., our largest market, the products which would be impacted by the tariffs would mainly be our tequila portfolio, which given geographic origin requirements must be made in Mexico, and also Canadian whisky," the company said in a statement.

Diageo said it's undertaken considerable contingency planning over the last few months, and it said mitigation measures include "pricing and promotion management, inventory management, supply chain optimization and re-allocation of investments."

Diageo shares (UK:DGE) $(DEO)$ dropped 3% in early London trade.

Diageo said its fiscal first-half earnings fell 12% to $1.93 billion, as sales fell 1% to $10.9 billion as an unfavorable exchange rate offset a 1% growth in organic sales. The 1.2 percentage point improvement in price and mix was offset by a 0.2% decline in volumes, Diageo said.

Don Julio was actually Diageo's top-performing key brand in North America, as organic sales surged 61%.

Diageo said U.S. consumers remained under pressure from cyclical macroeconomic factors including inflation, which, despite easing in recent months, remained elevated compared with historic levels.

-Steve Goldstein

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February 04, 2025 03:51 ET (08:51 GMT)

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