The FTSE 100-listed drinks firm, which counts world best-seller Johnnie Walker among its Scotch brands, saw more than 2% knocked off the value of shares after it said half-year sales growth was likely to suffer an impact from the recent legislation in India, as well as the later timing of Chinese New Year.
India issued a blanket ban on outlets selling alcohol within 550 yards of national and state highways in April.
Diageo’s biggest rival, Pernod Ricard, has also said the Indian ban will have an impact on half-year sales.
India is Diageo’s largest market in the Asia-Pacific region. Chief executive Ivan Menezes said the group was still on track with three-year targets, including for “mid-single digit” revenue growth, despite the sales blow.
He added: “Our business continues to strengthen through improved marketing, innovation and commercial execution, and we are well set up to deliver in line with our expectations.”
Diageo, which also makes Guinness stout, Smirnoff vodka, Baileys liqueur, Captain Morgan rum and Tanqueray gin, recently reported a solid set of full-year figures after a boost from the Brexit-hit pound.
Results posted in July showed pre-tax profits soared by nearly 25% to £3.6billion during the year to June 30, while net sales lifted 15% to £12.1billion.
The group benefited from healthy growth in Scotch sales, while sterling’s weakness laid the foundations for an extra lift when translating overseas earnings back into pounds. This saw Diageo raise both its profit margin growth target and annual dividend, by 5%, while it also announced a £1.5billion share buy-back scheme.
Scotch sales rose by 5%, with Johnnie Walker and Buchanan’s enjoying increases of 6% and 16% respectively.
As carried in PJ