Diageo Shares Fall Most in Eight Months on Slower Holiday Sales

Diageo Plc fell the most in eight months in London trading after the world’s biggest distiller said Thanksgiving sales missed its expectations and growth in the U.S. spirits industry has slackened.

Shares in the maker of Ciroc vodka dropped as much as 3.9 percent to 1,755 pence, the most since April 17. North American President Larry Schwartz said first-half sales in the company’s largest region will be “broadly flat” versus the same period last year.

“Thanksgiving sales were OK, but not as strong as we would have hoped,” Schwartz said on a teleconference with investors. His comments come a day after the head of Pernod Ricard SA’s Americas unit said Thanksgiving sales were “relatively soft.”

Diageo has grappled with a decelerating U.S. vodka market, which accounts for more than a quarter of the entire spirits category, as drinkers have grown tired of flavored vodkas and consume more whiskey. The company has lowered the price of its flagship Smirnoff brand in response, which will result in a narrower expansion of its North American profit margins this year compared with last, Schwartz said.

The U.S. spirits industry is growing at a pace of 3 percent to 3.5 percent, Schwartz said, a decline of about 0.5 percentage point over the last 12 months, due mostly to increased price competition. Spirits are still growing faster than both beer and wine in North America, he said.

Diageo is scheduled to report first-half results Jan. 29.

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