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Diageo First-Quarter Sales Fall Short of Analysts’ Estimates

Oct. 17 (Bloomberg) -- Diageo Plc, the world’s biggest distiller, reported slower first-quarter revenue growth than analysts anticipated amid declining sales in Europe and a slowdown in some emerging markets.

Organic revenue in the three months ended Sept. 30 rose 3 percent, the London-based company said today in a statement, trailing the 4 percent median estimate of 13 analysts in a Bloomberg News survey.

“While there are headwinds in some emerging markets, including the impact of the government policies in China, there are also markets in which we continue to deliver robust growth,” Diageo Chief Executive Officer Ivan Menezes said in the statement.

Diageo is seeking expansion in emerging markets to tap demand for products including Johnnie Walker Scotch whisky, Guinness stout and Smirnoff vodka in faster-growth areas. Sales fell 1.1 percent at its western Europe unit, while revenue in Latin America and in the Africa, Eastern Europe and Turkey division gained 11 percent and 1.3 percent, respectively. Sales in Diageo’s largest region, North America, rose 5.1 percent.

Sales in Asia edged up 0.6 percent. Diageo consolidated control over a maker of Chinese baijiu liquor last year. Chinese government cutbacks on extravagant spending and gifting are weighing on sales of premium drinks, Diageo’s Chief Financial Officer Deirdre Mahlan said in July, adding that the company was seeing “soft spots” in some emerging markets including Brazil.

To contact the reporter on this story: Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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