Diageo’s Q3 Performance Shows Stability — But the Real Story Is Its Strategic Shift. Since everything is uncertain in retail nowadays, the Fiscal 25 Q3 Trading Statement from Diageo has a real meaning — it alerts investors to changes. While we saw strong 5.9% growth in net sales for the spirits giant, the company’s underlying actions are important to consider in recovering its key operations in challenging times.
That strategy? A major change was launched under the brand name Accelerate and this could influence how FMCG suppliers in the beverage alcohol industry handle turbulence in foreign markets.
Is it enough to rely just on Diageo’s numbers when analyzing the company?
There is no question: on a surface level, Diageo’s results in Q3 are steady. Net sales increased by 2.9% and amounted to $4.4 billion. Coke’s business volume increased by 2.8%, while the mix of products and prices grew by an additional 3.1%. They do well for Apple, considering the current state of the global consumer market.
- Yet, it is the right timing, not any transformation efforts, keeping Diageo stable.
- An annual event called Shopper Holidays resulted in a 4% lift in Q3 shipments in the U.S. and Canada; this trend will end in Q4.
- People enjoyed drinking Guinness and tequila, but Asia Pacific’s market dropped because customers were spending less on alcohol.
- Boosted pricing and rising costs are not influencing Diageo to revise its full-year outlook.
Meanwhile, while this could be seen as an achievement by certain companies, Diageo is not pleased with it. That is why we offer the Accelerate programme.
Accelerate: Greater than Cutting Costs, It Involves Changing the Culture
The focus of Diageo’s Accelerate programme is to help the company get leaner and work in a more agile way.
This is where customers see changes in the FMCG industry.
This is what you will find in Accelerate.
More than $500 million will be saved in costs over the next three years.
- The company is aiming to generate $3 billion in free cash flow in every year beginning from FY26.
- Introducing a more efficient international way of operating
- Paying sharper attention to digital knowledge and improving the supply chain
Buyers in the retail industry need to notice this. Diageo’s leading position and decision to focus on profits and cash alert other partners of its new direction.
In this part, I will focus on each region and its economic issues.
It is also clear from the Diageo Fiscal 25 Quarter 3 Trading Statement that regional changes should help supermarket buyers decide on inventory, rates and marketing in spirits.
North America
- The main factor in growth at 6.2% was a highly advanced shipment of tequila before the U.S. introduced tariffs.
- Expect to see the economy slow in Q4, as the effects of the extra spending worn off.
Europe
- The company’s results were bolstered by the success of Guinness.
- Premium spirits sales were weak, suggesting that Heineken might now put more focus in beer instead of premium spirits.
Asia Pacific
- The company’s revenue increased by 1.6%, but prices and mix disappointed due to a decline of 3%.
- The downturn in spending and travel retail indicate the ultra-premium market might remain unchanged.
These two regions are known as Latin America and Africa.
High natural sales growth, indicating that people are becoming more confident again and the economy is recovering.
While Africa saw strong growth in prices and products, the local market remains a risk.
Supermarket buyers and FMCG suppliers should look at this in the following ways.
The information in the Q3 Trading Statement suggests that more than being strong, suppliers are planning for future changes.
Both supermarkets and people in charge of categories should be wondering:
- What new tariffs imposed on Diageo will prompt and what specific activities are they taking to reduce their expenses?
- Will it be more difficult to get products in the last quarter because the Q3 push-forward took place?
- How might partners work with Diageo to enhance the performance of the Asia Pacific region?
If Accelerate works as planned, Diageo will become more efficient, effective and flexible than its competitors around the globe.
Overall, the Q3 Statement Tells More Than Just How Profitable a Company Is
It is truly interesting to look at the details behind the scenes in the Diageo Fiscal 25 Q3 Trading Statement. It means the company is behaving proactively by rethinking and revising its processes.
Few vendors are willing to alter their approach, so Diageo’s aggressive move through Accelerate provides others with something to study and possibly follow.
In short, the successful companies in the supply chain can respond to problems in radical ways.
