Guinness Maker Warns of Higher Prices as Trade War Bites

Diageo, the maker of Guinness and Johnnie Walker, has warned that it may have to raise prices for its products in the US due to the potential impact of US President Donald Trump's tariffs on goods from Canada and Mexico. The company said that it is exploring numerous ways to alleviate the damage posed by tariffs, but warned that prices would likely have to rise.

Ewan Andrew, of Diageo, said: "We can mitigate a lot of it before pricing, but not all." The company is facing a $200 million (£161 million) hit to profits if the US president follows through with his threat of 25% tariffs on Canadian and Mexican goods from March 1. Bosses said they were exploring numerous ways to alleviate the damage posed by tariffs, but warned prices would likely have to rise.

Roughly 45% of Diageo's US sales come from products made in Canada, largely whiskies, and Mexico, where it makes tequila brands such as Don Julio. Almost 85% of the potential $200 million hit is linked to tequila.

Diageo's shares fell more than 3.5% as markets opened on Tuesday, reflecting investor concerns about the potential impact of the tariffs on the company's sales and market share. The company's chief financial officer, Nik Jhangiani, has stated that the company is also targeting efficiencies in its supply chain to mitigate the impact of the tariffs.

However, the company is facing a difficult period, with sales falling and declining consumer confidence. Diageo's share price has fallen by almost 24% over the last year, putting the company under pressure from investors to turn around its fortunes. Terry Smith, the star UK fund manager, dumped his stake in Diageo last year, citing worries over the long-term impact of weight-loss drugs on alcohol manufacturers.

Diageo's sales fell by 0.6% to $10.9 billion over the six months to January, with operating profits down $3.2 billion – a 4.9% decrease compared with the prior year. However, Debra Crew, its chief executive, highlighted the success of Guinness as a bright spot for the company, saying demand for the stout had "surpassed" expectations.



In conclusion, Diageo is facing a challenging time due to the potential impact of US President Donald Trump's tariffs on goods from Canada and Mexico. The company has warned that it may have to raise prices for its products in the US to mitigate the impact of the tariffs. While the company is exploring various ways to alleviate the damage posed by tariffs, it remains to be seen whether these measures will be sufficient to offset the potential damage to Diageo's sales and market share in the US. The company is also facing a difficult period with falling sales and declining consumer confidence, and investors are concerned about the potential impact of the tariffs on the company's share price.