Diageo has reported a flat start to its financial year, with Q1 organic net sales unchanged and volumes up 2.9%. Growth in Europe, LAC and Africa was offset by steep declines in China’s white spirits market and a softer-than-expected US consumer backdrop.

Reported net sales for the three months to 30 September slipped 2.2% to $4.9bn (£4.01bn), largely due to disposals.

The drinks group said that reduced Chinese sales of white spirits alone knocked roughly 2.5% off total net sales, while US spirits continued to struggle amid weak consumer confidence and tougher competitive dynamics, particularly in tequila.

Interim CEO Nik Jhangiani said the business was “not satisfied” with its performance, and was pushing hard to improve efficiency, investment discipline and commercial execution.

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He added that Diageo was “well advanced” in sharpening its strategy and was already acting on plans to revitalise growth across its wider brand portfolio.

The quarter saw solid gains for Johnnie Walker and Guinness, and strong momentum in RTDs and branded cocktails, partly balancing the drag from Chinese white spirits and tequila.

Diageo’s accelerate programme — expected to deliver around $625m (£513m) of savings over three years — is said to be on track.

However, the group cut its FY26 organic sales guidance to flat or slightly down, citing China and the US markets as the reason, although it still expects “low- to mid-single-digit” organic operating profit growth driven by cost savings.