EL7.AI
StocksMediumUpdated×3•Originally published 25 February 2026•Updated 25 February 2026•
1 min read

Diageo Shares Sink as US Tequila Slump Triggers Dividend Cut and Guidance Downgrade

Key Facts

1Diageo PLC halved its interim dividend to provide financial flexibility for restructuring.
2Net sales fell 4% to $10.5 billion in the six months ending December.
3Organic sales declined by 2.8% due to weak demand in the US and softness in the Chinese spirits market.

Diageo PLC shares experienced their sharpest drop in two years as the company deepened its annual guidance cut and reduced dividend payouts. The spirits giant now forecasts a 2% to 3% decline in organic net sales, a significant shift from its previous flat performance outlook. A primary driver for the dividend cut was the cratering of Tequila sales in the U.S., which contributed to a 15% plunge in North American operating profit. Despite the U.S. downturn, the European market remained a bright spot with a 10% increase in operating profit, exceeding analyst expectations. The company formalized a new dividend policy targeting a 30-50% payout ratio, establishing a minimum floor of 50 cents per share. These developments highlight the intensifying headwinds for DGE.L and DEO as overall volumes fell 0.9% amid weakening consumer demand.