SHARES in Diageo were down more than six per cent this morning as the drinks giant reported sales growth had slowed in North America, its biggest market, with Scotch whisky in decline in the first half.

Diageo reported top-line sales growth of 9.4% to £9.4 billion in the six months ended December 31, which lifted operating profit to £3.2bn from £2.7bn. The company said it is now 36% bigger than it was before the pandemic.

But sales grew more slowly than in the first half compared with the same period in 2022, when the market was boosted by the reopening of the on-trade after Covid restrictions, as well as customers restocking following supply-chain disruption.

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Diageo said organic sales had grown by 3% in North America, compared with double-digit percentage growth in the first half of 2022, with strong growth in Tequila and American whiskey offsetting declines in Scotch, Canadian whiskey, and vodka.

The company said price increases and supply productivity savings had more than offset the impact of absolute cost inflation on gross margins in the first half.

Chief executive Ivan Menezes said the company had made a “strong” start to the year and stated: “As we look to the second half of fiscal 23, whilst the operating environment remains challenging, I remain confident in the resilience of our business and our ability to navigate volatility.

“We believe we are well-positioned to deliver our medium-term guidance of consistent organic net sales growth in the range of 5% to 7% and sustainable organic operating profit growth in the range of 6% to 9% for fiscal 23 to fiscal 25.”

Shares in Diageo were trading at 3,439.25p at 11.15am, down 6.4%.