F-1 Diageo Form 20-F 2025

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES

EXCHANGE ACT OF 1934

OR

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended: 30 June 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from __ to __

Commission file number 1-10691

DIAGEO plc

(Exact name of Registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organisation)

16 Great Marlborough Street, London W1F 7HS, England

(Address of principal executive offices)

Randall Ingber, General Counsel & Company Secretary

Tel: +44 20 7947 9100

E-mail: the.cosec@diageo.com

16 Great Marlborough Street, London W1F 7HS, England

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
American Depositary Shares	DEO	New York Stock Exchange
Ordinary shares of 28101/108 pence each		New York Stock Exchange(i)

(i)Not for trading, but only in connection with the registration of American Depositary Shares representing such ordinary shares, pursuant to the requirements of the

Securities and Exchange Commission.

F-2 Diageo Form 20-F 2025

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period

covered by the Annual Report: 2,432,425,127 ordinary shares of 28101/108 pence each.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ No ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to

Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No þ

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file

such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the

registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an

emerging growth company. See the definitions of 'large accelerated filer,' 'accelerated filer,' and 'emerging growth company' in Rule

12b-2 of the Exchange Act :

Large Accelerated Filer þ Accelerated Filer ☐ Non-Accelerated Filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by checkmark if

the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards† provided pursuant to Section 13(a) of the Exchange Act. ¨

†  The term 'new or revised financial accounting standard' refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by

the registered public accounting firm that prepared or issued its audit report. þ

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the

registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive

based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b). ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this

filing:

U.S. GAAP  ¨	International Financial Reporting Standards		Other ¨
	as issued by the International Accounting Standards Board	☑

If 'Other' has been checked in response to the previous question, indicate by check mark which financial statement item the

registrant has elected to follow. Item 17 ¨  Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the

Exchange Act). Yes ☐  No þ

F-3 Diageo Form 20-F 2025

 

Contents
F-5	Cross reference to Form 20-F
F-7	Introduction
1	Strategic report: Our business
1	Diageo at a glance
2	Chair’s statement
4	Chief Executive’s statement
6	Performance highlights
8	Investment case
9	Market dynamics
10	Our Growth Ambition
11	Our strategy
16	Strategic report: Our performance
16	Our performance
20	Summary financial review
24	Business review
F-9	Business review - Corporate
33	Group financial review
F-10	Operating results 2024 compared with 2023
36	'Spirit of Progress'
38	Business integrity and human rights
40	Our people and culture
42	Health and safety
44	Promote positive drinking
46	Pioneering grain to glass sustainability
58	Champion inclusion and diversity
60	Our ESG reporting approach
63	Risk factors
74	Governance report
75	Chair's introduction to Governance
76	Corporate governance structure and division of responsibilities
78	Board of Directors
80	Executive Committee
82	Corporate governance report
97	Audit Committee report
F-11	Management’s report on internal control over financial reporting
104	Nomination Committee report
108	Directors’ Remuneration report
135	Directors’ report
139	Financial statements
140	Report of Independent Registered Public Accounting Firm - PCAOB ID 876

F-4 Diageo Form 20-F 2025

Contents (continued)
213	Additional information
213	Unaudited financial information
222	Cautionary statement concerning forward-looking statements
226	Other additional information
233	Liquidity and capital resources
238	Exhibits
240	Signature
241	Glossary of terms and US equivalents

F-5 Diageo Form 20-F 2025

Cross reference to Form 20-F
Item	Required item in Form 20-F	Page(s)
Part I
1.	Identity of directors, senior management and advisers	Not applicable
2.	Offer statistics and expected timetable	Not applicable
3.	Key information
	A. [Reserved]	—
	B. Capitalisation and indebtedness	Not applicable
	C. Reason for the offer and use of proceeds	Not applicable
	D. Risk factors	63-73
4.	Information on the company
	A. History and development of the company	F-7-F-8, 2-5, 22-32, 37-38, 45, 47-50, 64-70, 73, 82, 155-157, 170-176, 226-232
	B. Business overview	F-7-F-8, 2-5, 22-32, 37-38, 45, 47-50, 64-70, 73, 82, 155-157, 170-176, 226-232
	C. Organisational structure	200
	D. Property, plant and equipment	25, 174-176, 226-227
4A.	Unresolved staff comments	Not applicable
5.	Operating and financial review and prospects
	A. Operating results	2-5, 16-17, 20-22, 24-35, F-9, F-10, 63-64, 67, 71,  153-159, 161, 184-193, 213-215, 222
	B. Liquidity and capital resources	6, 16-17, 20, 22, 184-192, 217-218, 232-236
	C. Research and development, patents and licenses, etc.	160, 227
	D. Trend information	2-5, 8-19, 24-32, F-9, 222
	E. Critical Accounting Estimates	102, 153-154
6.	Directors, senior management and employees
	A. Directors and senior management	76-83
	B. Compensation	35, 78-81, 108-134, 176-180, 199-200
	C. Board practices	3, 75-85, 95-98, 100-101, F-11, 104-106, 108-110, 118
	D. Employees	24, 41, 160, 227
	E. Share ownership	112-132, 196
	F. Disclosure of a registrant’s action to recover erroneously awarded compensation	Not applicable
7.	Major shareholders and related party transactions
	A. Major shareholders	135
	B. Related party transactions	134, 199-200
	C. Interests of experts and counsel	Not applicable
8.	Financial information
	A. Consolidated statements and other financial information	34, 148-200
	B. Significant changes	102, 153-154, 216
9.	The offer and listing
	A. Offer and listing details	82-83, 136, 228-229
	B. Plan of distribution	Not applicable
	C. Markets	82-83, 136
	D. Selling shareholders	Not applicable
	E. Dilution	Not applicable
	F. Expenses of the issue	Not applicable

F-6 Diageo Form 20-F 2025

Cross reference to Form 20-F (continued)
Item	Required item in Form 20-F	Page(s)
10.	Additional information
	A. Share capital	Not applicable
	B. Memorandum and articles of association	82-83, 135-137
	C. Material contracts	135, 227, 237
	D. Exchange controls	232
	E. Taxation	228-230
	F. Dividends and paying agents	Not applicable
	G. Statement by experts	Not applicable
	H. Documents on display	232
	I. Subsidiary information	Not applicable
	J. Annual report to security holders	Exhibit 15.2
11.	Quantitative and qualitative disclosures about market risk	184-192
12.	Description of securities other than equity securities
	A. Debt securities	Not applicable
	B. Warrants and rights	Not applicable
	C. Other securities	Not applicable
	D. American depositary shares	136-137, 228-230
Part II
13.	Defaults, dividend arrearages and delinquencies	Not applicable
14.	Material modifications to the rights of security holders and use of proceeds	Not applicable
15.	Controls and procedures
	A. Disclosure controls and procedures	98
	B. Management’s report on internal control over financial reporting	101, F-11
	C. Attestation report of the registered public accounting firm	140-142
	D. Changes in internal control over financial reporting	101, F-11
16A.	Audit committee financial expert	101
16B.	Code of ethics	82-83, 101
16C.	Principal accountant fees and services	98-99, 160
16D.	Exemptions from the listing standards for audit committees	Not applicable
16E.	Purchases of equity securities by the issuer and affiliated purchasers	194
16F.	Change in registrant’s certifying accountant	Not applicable
16G.	Corporate governance	75-85, 95-106
16H.	Mine safety disclosure	Not applicable
16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	Not applicable
16J.	Insider trading policies	101
16K.	Cybersecurity	103
Part III
17.	Financial statements	Not applicable
18.	Financial statements	148-200
19.	Exhibits	238-239
Additional information
	Glossary of terms and US equivalents	241-242

F-7 Diageo Form 20-F 2025

Introduction

Diageo is a global leader in the beverage alcohol industry with an outstanding collection of brands across spirits and beer. Its

products are sold in nearly 180 countries around the world and its brands include Johnnie Walker, Crown Royal, JεB and Buchanan’s

whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Casamigos, Tanqueray and Guinness.

Diageo’s Performance Ambition is to be one of the best performing, most trusted and respected, consumer products companies in the

world.

Diageo plc is incorporated as a public limited company in England and Wales. The company which is now Diageo plc was

incorporated as Arthur Guinness Son and Company Limited on 21 October 1886. The Diageo group was formed by the merger of the

Grand Metropolitan Public Limited Company and Guinness plc groups in December 1997. Diageo plc’s principal executive office is

located at 16 Great Marlborough Street, London W1F 7HS, England and its telephone number is +44 (0) 20 7947 9100. Diageo plc’s

agent for service in the United States for the purposes of Diageo’s registration statement on Form F-3 (333-269929) is General

Counsel, Diageo North America, Inc., 175 Greenwich Street, 3 World Trade Center, New York, NY 10007.

This is the Annual Report on Form 20-F of Diageo plc for the year ended 30 June 2025. The information set out in this Form 20-F

does not constitute Diageo plc’s statutory accounts under the UK Companies Act for the years ended 30 June 2025, 30 June 2024

and/or 30 June 2023. The accounts for the years ended 30 June 2024 and 30 June 2023 have been delivered to the registrar of

companies for England and Wales and those for the year ended 30 June 2025 will be delivered to the registrar of companies for

England and Wales in due course.

This document contains forward-looking statements that involve risk and uncertainty because they relate to, and are dependent upon,

events and circumstances that will occur in the future. There are a number of factors that could cause actual results and developments

to differ materially from those expressed or implied by these forward-looking statements, including factors beyond Diageo’s control.

For more details, please refer to the Cautionary statement concerning forward-looking statements on pages 222.

This document may contain inactive textual addresses to websites operated by Diageo (including www.diageo.com) and third parties.

Reference to such websites is made for information purposes only, and any information found at such websites does not form a part

of this document and is not incorporated by reference into this document. Diageo does not make any representation or warranty with

respect to the accuracy or completeness of, or take any responsibility for, any information found at any websites operated by third

parties. This report includes names of Diageo’s products, which constitute trademarks or trade names which Diageo owns or which

others own and license to Diageo for use. In this report, the term ‘company’ refers to Diageo plc and terms ‘group’ and ‘Diageo’ refer

to the company and its consolidated subsidiaries, except as the context otherwise requires. A glossary of terms used in this report is

included at the end of the report.

The consolidated financial statements are prepared in accordance with IFRS® Accounting Standards (IFRSs) adopted by the UK

(UK-adopted International Accounting Standards) and IFRSs, as issued by the International Accounting Standards Board (IASB),

including interpretations issued by the IFRS Interpretations Committee. IFRS as adopted by the UK differs in certain respects from

IFRS as issued by the IASB. The differences have no impact on the group’s consolidated financial statements for the years presented.

The consolidated financial statements are prepared on a going concern basis under the historical cost convention, unless stated

otherwise in the relevant accounting policy.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,

and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

The financial performance expectations related to Diageo’s Accelerate programme, Diageo’s fiscal 26 outlook, Diageo’s medium-

term guidance and any other statements related to Diageo’s performance expectations for the year ending 30 June 2026 or thereafter

included in this document have been prepared by and are the responsibility of Diageo’s management. PricewaterhouseCoopers LLP

has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the financial performance

expectations and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect

thereto. The PricewaterhouseCoopers LLP report included in this document relates to Diageo’s historical financial statements. It does

not extend to the financial performance expectations and should not be read to do so. The financial performance expectations were

not prepared with a view toward compliance with published guidelines of the Securities and Exchange Commission or the guidelines

established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial

information.

F-8 Diageo Form 20-F 2025

Introduction (continued)

Information presented

Organic movements and organic operating margins are before exceptional items. Commentary, unless otherwise stated, refers to

organic movements. Share, unless otherwise stated, refers to value share. See page 213 for explanation and reconciliation of non-

GAAP measures, including organic net sales, organic operating profit, free cash flow, eps before exceptionals, ROIC, adjusted net

debt, adjusted EBITDA and tax rate before exceptional items.

The brand ranking information presented in this report, when comparing information with competitors, reflects data published by

sources such as Global Data, Nielsen, NABCA and IWSR. Market data information and competitive set classifications are taken from

independent industry sources in the markets in which Diageo operates. In addition, Diageo’s financial year end is 30 June, and such

data may relate to dates other than 30 June or periods other than the financial year ended 30 June, such as calendar year end.

Disclosures not included in Annual Report on Form 20-F

The following pages and sections of this document do not form part of the Annual Report on Form 20-F and are furnished to the SEC

for information only:

•Disclosures under the heading ‘Statement on Section 172 of the Companies Act 2006’ on page 2.

•Disclosures under the headings ‘Spirit of Progress’ and ‘Looking ahead to fiscal 26 and beyond’ in the Chair’s statement on page 3.

•Disclosures under the headings ‘Accelerate: Strengthening Diageo for the future’, ‘Leadership: Executive Committee changes this

fiscal’ and ‘Looking ahead’ in the Chief Executive’s statement on page 5.

•Disclosures under the heading ‘Fiscal 25 non-financial performance’ on page 6.

•Disclosures under the heading ‘A strong investment case’ on page 8.

•Disclosures under the heading ‘Progressing our Growth Ambition’ on page 10.

•Disclosures under the heading ‘Our Strategy’ on page 11.

•Disclosures under the headings ‘Don Julio Presents 194GOU’ and ‘The Sweeter Side of Johnnie Walker Black Label’ on page 12.

•Disclosures under the heading ‘Guinness' Lovely Day in the United States’ on page 13.

•Disclosures under the heading ‘Non-financial performance’ on pages 18 to 19.

•Disclosures under the heading 'Health and safety' on pages 42 to 43.

•Disclosures under the headings ‘Stakeholder engagement’, ‘Wider stakeholder engagement’ and ‘Workforce Engagement

statement’ on pages 86 to 93.

•Disclosures under the headings ‘Internal control and risk management’, ‘Viability statement’, ‘Going concern’, and ‘Political

donations’ on page 95.

•Disclosures under the headings ‘Disclosure of information to the auditor’ and ‘Corporate governance statement’ on page 135.

1 Diageo Annual Report 2025

A broad portfolio of iconic brands

OUR PURPOSE	OUR STRATEGY
	Unleash the power of our brands and portfolio to lead and shape consumer trends executed with operational excellence

OUR PERFORMANCE
$20.2bn fiscal 25 reported net sales	13 billion dollar brands(1)	#1 in international spirits by retail sales value(1)	1.4x larger than nearest international spirits competitor(1)

OUR GLOBAL FOOTPRINT
∼180 countries and territories	200+ brands	29,000+ employees	110+ manufacturing sites

OUR CATEGORIES AND PRICE POINTS

#1 in

whisk(e)y

tequila

vodka

gin

liqueurs

non-alc spirits

by retail sales value(1)

(1)  IWSR, 2024 (USD value)

Fiscal 25 reported net sales by price tier

Value

Standard

Premium

Super-premium

Ultra-

premium

Luxury

25%

62%

2 Diageo Form 20-F 2025

CHAIR’S STATEMENT

Sir John Manzoni

Chair

Reflections on my first six months

In February 2025, I was appointed as Chair of the Diageo Board after

three and a half years as a Non-Executive Director, succeeding Javier

Ferrán. I would first like to extend my sincere thanks to Javier, who

led the Board with great dedication and stewardship.

Having been a member of the Board since 2020, I have a deep

appreciation for the legacy of the company and its iconic brands, and I

am committed to ensuring we do more to unlock the full potential of

Diageo.

Over these last six months, I have spent extensive time with our

leadership, colleagues, customers and stakeholders in almost every

corner of the organisation around the globe. I have listened to their

views and insights into Diageo, our industry and the broader

consumer environment.

From our breweries in Ireland and our tequila operations in Mexico, to

sales teams across Europe and the United States, and of course our

historic scotch distilleries – what has stood out consistently is our

unrivalled portfolio of brands, our truly global footprint, our fantastic

brand-building capabilities and our dedicated workforce.

These distinctive qualities give me confidence in our abilities over the

long-term. There is no question that current industry conditions are

challenging, but we are taking steps with urgency to ensure Diageo is

positioned to win in the short-term, and emerge stronger and more

agile when conditions improve.

STATEMENT ON SECTION 172 OF THE COMPANIES ACT 2006
Section 172 of the Companies Act 2006 requires the Directors to promote the success of the company for the benefit of the members as a whole, having regard to the interests of stakeholders in their decision-making. In making decisions, the Directors consider what is most likely to promote the success of the company for its shareholders in the long term, as well as the interests of the group’s stakeholders. The Directors understand the importance of taking into account the views of stakeholders and the impact of the company’s activities on local communities, the environment, including climate change, and the group’s reputation.
	Read more about how stakeholders were taken into account in decision-making on pages 86-90.

Fiscal 25 performance

The macroeconomic and geopolitical environment continues to be

challenging for the Total Beverage Alcohol (TBA) industry, as well as

broader consumer goods, particularly in the United States and China.

Over the past two years, consumer wallets and confidence have been

under sustained pressure.

Despite this, Diageo delivered organic net sales growth in fiscal 25 of

1.7%, driven by organic volume growth of 0.9% and positive price/mix

of 0.8%. Don Julio, Guinness and Crown Royal were the standout

performers, seeing good growth in the year. Whilst there is clearly

more to do, I am pleased that we are showing organic growth ahead of

competition.

In a challenging year we kept the dividend flat, which we feel is

prudent. This brings our full year dividend to 103.48 cents per share.

This decision has been made with reference to performance trends and

short-term macroeconomic and geopolitical pressures, and does not

reflect reduced confidence in the long-term strength and growth

potential of the business. Going forward, we remain committed to a

progressive dividend policy.

This year, we launched and have made good progress on the initial

phase of Accelerate, our company-wide programme to strengthen the

business.

Accelerate is helping to drive a disciplined focus on cost management

and consistent cash delivery, as well as strengthening our operating

model, and improving commercial and digital capabilities. It is clear

that we must do more to rebuild confidence and grow quality

market share.

Whilst this is only the first phase of the programme, these changes are

a vital opportunity to make Diageo a more efficient and agile company,

delivering both more consistent growth and cash flow, as well as

stronger shareholder returns.

Consumer trends and industry fundamentals

Looking more broadly at the industry, there has been considerable

discussion on emerging new consumer trends, which our Board and

management team continue to monitor. Moderation is a theme we are

monitoring particularly closely, as well as many sub-factors, including

the impact of GLP-1s (weight-loss drugs), cannabis and Gen Z

consumption patterns.

We see moderation as a significant opportunity for Diageo, with the

inherent versatility of spirits making moderation more accessible and

appealing. Diageo’s long-term conviction that consumers want to

‘drink better, not more’ remains one of the key building blocks of our

strategy.

Our position in the non-alcoholic space is already strong. We are now

the world’s largest non-alcoholic spirits player, more than four times

bigger than any of our competitors in this space(1). This fiscal, we

expanded our portfolio with the acquisition of Ritual Beverage

Company LLC and rolled out Captain Morgan 0.0 to more markets,

complementing our existing non-alcoholic options: Guinness 0.0,

Tanqueray 0.0, Gordon's 0.0 and Seedlip.

As well as moderation, other long-standing consumer dynamics remain

significant for Diageo, including premiumisation, where we are

positioned to win across different categories and occasions. Over the

last 10 years, premium and above international spirits grew from 26%

of category value to almost 35%. The super-premium plus price-tier has

grown in value more than 50% faster than other price tiers in the

category.(1)

(1) IWSR, 2024 (by retail sales value)

3 Diageo Form 20-F 2025

Whilst macroeconomic uncertainty is impacting both the timing and

pace of recovery, we continue to believe in the attractive long-term

fundamentals of our industry and in our ability to outperform the

market, underpinned by our portfolio of 13 billion-dollar brands.

Changing consumer tastes are not new for a business like Diageo and

they present us with opportunities to leverage our scale in our leading

positions, across more categories than anyone else.

Board changes for a new chapter

In July, we announced that Debra Crew had stepped down as Diageo

Chief Executive and as a Board Director. On behalf of Diageo and the

Board, I would like to thank Debra for her many contributions to

Diageo, including steering the company through the challenging

aftermath of the global pandemic and the ensuing volatility.

The Board is engaged in a comprehensive search process for Debra’s

successor, which includes consideration of internal and external

candidates, to secure the best individual to lead Diageo and to take

the company forward. Nik Jhangiani, Chief Financial Officer, has been

appointed Interim Chief Executive until a permanent appointment is

made. We are pleased that our former Chief Financial Officer, Deirdre

Mahlan, has agreed to rejoin Diageo as Interim Chief Financial Officer.

Nik joined us as Chief Financial Officer in September 2024, bringing

with him more than 30 years of finance experience gained in roles in

the United Kingdom, Europe, India, Africa and the United States. This

includes 20 years as a Chief Financial Officer, spending most of his

career in consumer and beverage industries, including within the Coca-

Cola system.

In addition, we were delighted to welcome Julie Brown in August 2024

as a Non-Executive Director and Chair of the Audit Committee,

succeeding Alan Stewart. Julie currently serves as Chief Financial Officer

of GSK plc and was previously Chief Operating and Financial Officer

and Executive Director at Burberry Group plc. She has decades of

experience in financial, commercial and strategic roles in complex

multi-national organisations within highly regulated and consumer

industries.

These additions to our Board and leadership team bring invaluable

breadth and depth of experience. Looking ahead, we will continue

to keep the composition of the Board under regular review and will add

skills and expertise as necessary and where it enhances our overall

capabilities.

Spirit of Progress

Hand-in-hand with our ambition for Diageo to be one of the best-

performing consumer products companies is our ambition to remain

highly trusted and respected across everything we do.

This is why we remain strongly committed to our 'Spirit of Progress' ESG

action plan. Over the past 12 months, the Board has been particularly

focused on the aspects where we believe we can have the most

substantial impact – positive drinking and water stewardship.

I am proud that Diageo has promoted responsible drinking since its

formation in 1997. We continue that commitment today by investing in

education programmes to discourage the harmful use of alcohol and

encouraging moderate drinking.

This includes DRINKiQ, established in 2008, to provide people with

world class information so they can make informed choices around

alcohol consumption, which is now communicated on our brand

packaging.

We also ensure our marketeers put their creative talents towards

moderation advertising. For example, during this fiscal we launched

our bold new ‘Take a Minute. Make a Plan. Never Drive Impaired’

campaign in the United States, in partnership with Mothers Against

Drunk Driving, the National Football League and Uber, to tackle

impaired driving. This campaign reached millions of consumers.

Our focus on water-stressed areas has continued to deliver strong

water-use efficiency performance with a 2.6% improvement in the

water efficiency index versus last year and a 20.6% improvement since

our 2020 baseline. We continued to replenish water in our priority

water basins, this year delivering over 3 million cubic metres of

additional capacity, collaborating with key partners to support the

communities in which we operate.

After careful review of our carbon reduction goals, we proposed new

science-based targets, reflecting both the opportunities and challenges

associated with reducing emissions, which were approved by the

Science Based Targets initiative (SBTi). These include new interim

targets for direct and value chain emissions and longer-term net zero

targets. We remain committed to a science-based approach and

delivering against stretching ambitions.

Looking ahead to fiscal 26 and beyond

In the immediate term, my focus, and that of the Board, is to appoint

the right Chief Executive, and support our leadership team to get

Diageo back to delivering consistent growth, maximising the

opportunities to strengthen the business and deliver stronger

shareholder returns.

We will continue to prioritise a culture with our customers and

consumers at the core, encouraging accountability, agility and

adaptability.

Finally, I want to thank our employees around the world. Their energy,

ideas, work ethic, passion for our brands, and commitment to our

business in what has been a particularly difficult operating

environment is deeply appreciated. I was delighted to hear that our

employee engagement levels have remained high this year, with 90% of

our employees stating they are proud to work for Diageo.

The Board and I are committed to working closely with the Executive

Committee to ensure the decisions we make today position Diageo to

thrive and deliver for shareholders. More resilient, more responsive,

and more relevant to consumers than ever before.

Sir John Manzoni

Chair

4 Diageo Form 20-F 2025

CHIEF EXECUTIVE’S STATEMENT

Nik Jhangiani

Interim Chief Executive

Introduction

Having been appointed Interim Chief Executive in July 2025, I am pleased

to be sharing Diageo’s Annual Report for the 2025 fiscal year with our

shareholders and wider stakeholders. I would like to thank Debra Crew for

her significant contribution to Diageo. I know I speak for everyone at the

company in thanking her for her work over the last six years and wishing

her the very best for the future.

I joined Diageo as Chief Financial Officer in September 2024. Since then,

I have fully immersed myself into the company and have seen first-

hand that this is a business full of passionate people who want to win.

The purpose Diageo was founded with in 1997 remains the same today:

to help consumers around the world to celebrate life, every day,

everywhere. With a broad portfolio of iconic brands in many of the

largest categories in Total Beverage Alcohol (TBA), 13 billion-dollar

brands, several of which are leading in their respective categories, and

sales in nearly 180 countries, we are fortunate to have a number of

competitive advantages. However, we must do more to continue to

lead the way in premium drinks and drive growth in an evolving TBA

landscape, and deliver stronger shareholder returns.

I look forward to working in my new capacity alongside the Board of

Directors, the Executive Committee and our broader workforce in doing

this.

Delivering on guidance despite a challenging

market

Our industry backdrop has remained highly challenging in fiscal 25 –

arguably tougher than in many previous cycles.

We have continued to undertake considerable contingency planning in

recent months in relation to tariffs, and have taken action to help

mitigate their potential impact including inventory management,

supply chain optimisation and re-allocation of investments. Looking

ahead, we will continue to work on mitigating measures, and our long

track record of managing international tariffs gives us confidence in

our ability to navigate this successfully.

We continue to believe in the attractive long-term fundamentals of our

industry and in our ability to continue to outperform the market as the

TBA landscape evolves. This is consistent with the consumer data that

we have collated and continue to track across our markets, including

early findings from our recent proprietary survey of 21 markets. We

will continue to track the evolving landscape closely to understand

nuances and changes.

In fiscal 25, organic net sales grew 1.7%, including the impact of the

Cîroc transaction. Excluding this impact, Diageo's organic net sales

growth was 1.5% and organic operating profit declined by 1.0%,

consistent with our guidance.

Organic operating profit declined by 0.7% including the impact of the

Cîroc transaction, mainly due to continued investment in overheads and

partly offset by slight gross margin expansion. Net cash flow from

operating activities increased by $0.2 billion to $4.3 billion. Free cash

flow increased by $0.1 billion to $2.7 billion.

Despite the tough consumer landscape, many of our markets and

brands have delivered positive performance this year.

Tequila organic net sales were up 18% in the fiscal, with share gains

across our business. Diageo is the #1 tequila player globally and our

portfolio gained share in 94% of reported net sales in measured

markets, with strong performance particularly from Don Julio

Reposado. Building on this, Don Julio was activated at scale with Día

de los Muertos across 24 countries. Don Julio 1942 also saw its first

ever global product collaboration with DJ Peggy Gou.

Diageo remains the global leader in international whisk(e)y,(1) with

nearly 25% value share.(2) In fiscal 25, our Canadian whisky Crown Royal

grew by 3%. Johnnie Walker, while gaining share of international

whisk(e)y and scotch and recruiting consumers including through the

launch of Johnnie Walker Black Ruby, saw an organic net sales decline,

largely driven by the United States, Asia Pacific Travel Retail and

Greater China. When the consumer wallet is under pressure, scotch is

typically one of the most adversely impacted categories. In fiscal 26,

we are focused on accelerating Johnnie Walker recruitment through

both premiumisation and scaling innovation.

Guinness has continued its remarkable growth journey, with over 3.8

million new LPA+ drinkers since 2019. It became the number one beer

in football occasions in Great Britain(3) thanks to our English Premier

League partnership. It has expanded to 88 markets, and continues to

make strides in the United States, which we believe is a major long-

term opportunity. Guinness has also recruited a significant number of

new consumers in new occasions. For instance, in Ireland, Guinness is

now more popular in the summer than at Christmas; and Guinness 0.0

is playing a key role in addressing moderation, becoming Great

Britain’s number one non-alcoholic beer.(4)

We have made a number of selective disposals consistent with

our long-term strategy of deleveraging and improving balance sheet

flexibility. This includes the sale of non-core brands Pampero, Safari

and Cacique, as well as a shift to an asset-light model in many parts

of Africa, with the disposal of shareholdings in Guinness Nigeria,

Guinness Ghana and Seychelles Breweries. We also made the strategic

decision to move forward with a reduced number of investments within

Distill Ventures and to no longer bring in any new brands through the

programme. Going forward, we remain committed to actively pursuing

disposals of appropriate, non-core assets.

We have made progress this fiscal, but there is clearly more work to

do. I am focused on driving accelerated growth, sharpening our

strategy and improving the performance of our broader portfolio and

brands.

Addressing the moderation opportunity

Our strategy has long been centred on consumers drinking better, not

more, and moderation is one of the most significant long-term trends

we track. I am proud that Diageo has advocated for responsible

drinking since our formation, funding and championing consumer

education through our brands as well as specific programmes that

target underage drinking and drink-driving.

(1) Includes Scotch, Irish, US, Canadian and Japanese whiskeys

(2) IWSR, 2024 (by retail sales value)

(3) Alcovision data to March 2025

(4) IWSR, 2024 (by retail sales value)

5 Diageo Form 20-F 2025

In fiscal 25, we have seen increased attention on the moderation

agenda. We view moderation as one of our greatest opportunities. The

inherent versatility of spirits makes moderation more accessible and

appealing, and we are leaders in the fast-growing non-alcoholic spirits

category.

In addition, this segment not only clearly supports moderation but

enables us to recruit consumers from beyond spirits. To extend our

leadership, in fiscal 25, we acquired Ritual Beverage Company LLC, the

#1 non-alcoholic spirits brand in the United States.

Our broader non-alcoholic portfolio also delivered strong performance

in fiscal 25, growing c.40%, with particularly strong momentum in

Guinness 0.0 which delivered double-digit net sales growth, with

standout performance in Great Britain, Ireland and the United States.

Accelerate: Strengthening Diageo for the future

This year marked the launch of Accelerate, our company-wide

initiative to build a stronger, more efficient and agile business, setting

out clear cash delivery targets and a disciplined approach to

operational excellence and cost efficiency.

The first phase of the Accelerate programme is progressing well. 

Underpinning delivery of our guidance are the following targets:

1.Consistent cash delivery: Guidance remains to sustainably deliver c.

$3 billion free cash flow per annum from fiscal 26, increasing as

business performance improves. A renewed focus on cash has been

implemented across the organisation, including delivering a positive

operating leverage and reduced capex from fiscal 26.

2.Cost savings: We now expect to deliver c.$625 million cost savings

over the next three years. This includes savings from A&P

efficiencies, overheads, supply chain efficiencies and trade

investment.

3Commitment to deleveraging: We continue to expect to be well

within the leverage target range of 2.5-3.0x net debt to adjusted

EBITDA no later than fiscal 28. This will be delivered through a

combination of organic growth and positive operating leverage,

combined with tighter capital discipline, and appropriate and

selective disposals over the coming years.

As part of Accelerate, we are also evolving our operating model to give

us a competitive advantage. For example, in Europe, we have

undertaken work to unlock the region’s full potential. This includes

targeted investments and the creation of more standalone markets,

such as Iberia and Italy, to bring us closer to customers and consumers,

while driving better performance.

Leadership: Executive Committee changes this

fiscal

In March 2025, Praveen Someshwar joined Diageo as Managing Director

of Diageo India and CEO of USL, taking over from Hina Nagarajan. Prior

to this, Praveen was MD and CEO of HT Media, one of India’s largest

and best-known media groups.

After four years as Diageo India Managing Director and CEO of USL, in

March 2025, Hina Nagarajan took on the role of President of our Africa

business. Prior to her successful period leading Diageo India, Hina’s

first role in Diageo from 2018 onwards was Managing Director of Africa

Emerging Markets.

Dayalan Nayager, previously President of Diageo Africa since July 2022,

became President of Diageo Europe, taking over from John Kennedy,

retaining his role of Chief Commercial Officer. Over the last 12 years,

Dayalan has led several Diageo businesses in Europe, including Great

Britain, Ireland and France. I want to thank John for leading the

Europe business on an interim basis since January 2024 and completing

his 30-year tenure at Diageo in 2023.

Randall Ingber re-joined Diageo in June 2025, succeeding Tom Shropshire

as General Counsel, and taking over as Company Secretary from the

start of fiscal 26. Randall had a successful 19-year career within our

Legal function before serving as General Counsel and Company

Secretary at Lion Group, a leading Australasian beverage alcohol

business and one of the largest craft brewers in the United States.

I would like to thank Tom for his significant impact during his time with

Diageo. Since 2021, he has been instrumental to shaping our agenda,

advising our Board and Executive Committee on a range of topics.

Lastly, we are looking forward to Deirdre Mahlan rejoining Diageo as

our interim Chief Financial Officer later in August. Deirdre’s deep

spirits industry experience and financial expertise includes a 27-year

career with Diageo and predecessor companies, culminating in five

years as CFO and five more leading our North American business.

I am looking forward to working with the Executive Committee and the

Board as we work to deliver our commitments to shareholders for fiscal

26.

Looking ahead

We look ahead to fiscal 26 with a strong sense of purpose and resolve.

Alongside the Board and the Executive Committee, I am committed

to driving sustainable net sales growth, leveraging the strength of our

portfolio and brand-building capabilities whilst strengthening Diageo’s

commercial execution.

Our Accelerate programme is progressing at pace and is central to

creating a more agile and performance-focused organisation. All of the

actions currently underway will position us well to drive increased

growth as the market recovers and the TBA landscape evolves.

We look forward to continuing to bring our brands to life in fiscal 26,

both through superior commercial execution and via high profile

partnerships and events, such as the FIFA 2026 World Cup, for which

we are the official spirits partner in the Americas.

Lastly and most importantly, I want to thank my Diageo colleagues

around the world, whose commitment, agility, and passion for our

brands is our greatest asset and a deep source of pride.

Diageo’s ambition remains clear: to be one of the best performing,

most trusted and respected consumer products companies in the

world. With world-class brands and talent, highly effective global

consumer insights and an ongoing focus on efficiency and

effectiveness, we are confident in our ability to outperform the

market, restore Diageo to a top quartile TSR consumer company, and

provide stronger returns to shareholders.

Nik Jhangiani

Interim Chief Executive

6 Diageo Form 20-F 2025

PERFORMANCE HIGHLIGHTS

Fiscal 25 financial performance

Volume (equivalent units)		Reported net sales(2)
EU230.1m		$20,245m
(2024: EU230.5m)		(2024: $20,269m)
Reported movement	—%	Reported movement	—%
Organic movement(1)	1%	Organic movement(1)	2%
Reported operating profit		Net cash from operating activities
$4,335m		$4,297m
(2024: $6,001m)		(2024: $4,105m)
Reported movement	(28)%	2025 free cash flow(1)	$2,748m
Organic movement(1)	(1)%	2024 free cash flow(1)	$2,609m
Earnings per share (eps)		Total recommended dividend per share(3)
105.9c		103.48c
(2024: 173.2c)		(2024: 103.48c)
Reported movement	(39)%
Eps before exceptional items movement(1)	(9)%

Visit diageo.com for more information.

Fiscal 25 non-financial performance

Positive drinking	Inclusion and diversity
2.0m	43%	46%
(2024: 2.2m)	(2024: 44%)	(2024: 46%)
Number of people educated on the dangers of underage drinking through a Diageo supported education programme	Percentage of female leaders globally	Percentage of ethnically diverse leaders globally
Water efficiency – across the company	Greenhouse gas emissions
(15.8)%	(18.8)%
(2024:(12.9)%)	(2024: (14.4)%)
Percentage change in water efficiency across the company compared to fiscal 20 baseline	Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 22 baseline

GROUP
The Accelerate programme In May, we launched the first phase of Accelerate, a company-wide initiative  to help us deliver consistent, sustainable performance including $3 billion in free cash flow per year, starting in fiscal 26. To achieve this we aim to:
Build a more simplified, integrated operating model to optimise investment and allocate resources effectively towards long- term sustainable growth.
Achieve c.$625 million in cost savings over three years, to enable reinvestment in future growth and improved operating leverage.
Return to well within our leverage ratio target of 2.5x–3.0x net debt to adjusted EBITDA no later than fiscal 28 providing a lot more flexibility, and supported by selective disposals of non-core assets.
	Read more on page 23.

(1)See definitions and reconciliation of non-GAAP measures to GAAP measures on pages 213-220.

(2)Net sales are sales less excise duties.

(3)Includes recommended final dividend of 62.98c.

Unless otherwise stated in this document, percentage movements refer to organic movements. For a definition of organic movement and reconciliation of all non-GAAP measures to GAAP measures,

see pages 213-220. Leverage ratio calculated using adjusted net debt which is the equivalent to adjusted net borrowings (net borrowings plus post-employment benefit liabilities before tax). Share

refers to value share. Percentage figures presented are reflective of a year-on-year comparison, namely 2024-2025, unless otherwise specified. 

7 Diageo Form 20-F 2025

Regional

performance

Our regional presidents share

their fiscal 25 perspectives.

Latin America & Caribbean
Alvaro Cardenas President, Latin America and Caribbean
Fiscal 25 was a year of significant progress for us, during which we became stronger and more resilient, accelerating growth in the second half. We harnessed the experience of a challenging fiscal 24 and grew wiser, making a conscious decision to focus on operational excellence, enabling our leaders to identify and pursue opportunities across the region and gain market share in key battlegrounds.
$1.8bn Reported net sales
	Read more on page 30.

North America
Sally Grimes Chief Executive Officer, Diageo North America
As Diageo’s largest region, I am proud we have delivered growth this fiscal, particularly in a challenging environment. This growth has been driven by areas including tequila, in particular the strong performance of Don Julio Reposado, and our world- class brand building, including joining the 2026 FIFA World Cup as Official Spirits Supporter. We have also made significant progress in our journey towards increased marketing effectiveness and efficiency, improved commercial execution through our route-to-market transformation and supply chain resiliency.
$8.0bn Reported net sales
	Read more on pages 26-27.

Africa
Hina Nagarajan President, Africa
In Africa, we have worked hard over the last few years to put this business on a bigger growth trajectory. This is evident from our results this fiscal year, delivering reported net sales growth  with double-digit growth in Ghana, South Africa and Tanzania. As one of the fastest growing regions, we believe the fundamentals are now in place for us to be a steady growth engine for Diageo, fully leveraging the investments we are making to take advantage of our outstanding portfolio.
$1.8bn Reported net sales
	Read more on page 31.

Europe
Dayalan Nayager President, Europe and Chief Commercial Officer
In fiscal 25, we have demonstrated resilience delivering positive net sales growth and expanding Diageo's market share in both spirits and total beverage alcohol. This success was significantly bolstered by Guinness which saw double-digit growth, reflecting the enduring strength of the brand. Guinness' strategic alignment with major sporting events, including the English Premier League and the Six Nations, has been key to driving these positive results, reaching new and diverse audiences.
$4.8bn Reported net sales
	Read more on page 28.

Asia pacific
John O’Keeffe President, Asia Pacific, Global Travel and India
This year has been challenging but we've been able to execute amplified strategic innovations with the launches of Johnnie Walker Blonde, Johnnie Walker Black Ruby and Smirnoff Crush RTD whilst also making structural interventions across the business, setting up the region for sustainable success moving forward.
$3.6bn Reported net sales
	Read more on page 29.

8 Diageo Form 20-F 2025

Investment case

A strong investment case

Attractive,

long-term

industry

fundamentals

VERSATILITY OF SPIRITS

The versatility of spirits positions

the category well for the future

across occasions, premiumisation

and the evolution of consumer

trends including moderation and

sourcing growth from beer and

wine. Continued category

momentum comes from spirit's

cultural relevance, innovation and

consumers' desire to explore new

categories and experiences.

People are drinking better,

not more

Spirits' long-term value growth is

also driven by premiumisation as

consumers want to drink better,

not more. In the last 10 years,

premium and above spirits grew

from 26% of category value to

almost 35%. The super-premium-

plus price tier has grown in value

more than 50% faster than other

price tiers in the category. This

price tier gained c.600 basis points

of share of international spirits

retail sales value (RSV) since 2014.

(1) 

Long runway

for growth

Diageo sees a substantial runway

for sustainable growth. With a

global TBA share of 4.5%,(1) we

have significant headroom for

future growth. In the United

States, our largest market, we

remain underpenetrated in key

categories with our leading

brands, presenting a strong

opportunity to recruit consumers

and drive growth.

...aligned to

our

competitive

advantages

A BROAD portfolio of iconic

brands

We are #1 in international

spirits,  the #3 player in TBA

and have 13 billion-dollar

brands.(1) We have a diverse

portfolio of brands, providing a

broad range of choices for

consumers across occasions. 

A diversified geographical

footprint

Our geographic footprint gives us

access to consumers in the

world's largest markets, such as

the United States, as well as the

vibrant markets of India and

China. Our regional breadth

allows us to flex prioritisation,

investment and activation,

increasing our ability to capture

growth and reduces dependency

on any single region or market.

A leading portfolio across

price points

Our portfolio is spread broadly

across the pricing ladder – across

and within categories, providing

choice in most

economic environments.

Diverse and

engaged talent

Diageo has an entrepreneurial,

talented and diverse workforce of

more than 29,000 people globally

and are led by a highly

experienced Executive

Committee. Our Executive

Committee combines home-grown

talent with externally recruited

leaders who bring invaluable

market experience and fresh

perspectives.

...as we

execute with

focus

RESHAPED PRIORITIES

SUPPORTED BY  ACCELERATE

In fiscal 25, we introduced our

reshaped priorities to drive

improved performance:

delivering sustainable top-line

growth, increasing operating

leverage, maximising cash flow

and optimising returns. These

strategic outcomes are being

embedded across the business,

with further opportunity. We are

moving at pace and this is

underpinned by the work

underway on our Accelerate

programme.

We launched the first phase of 

Accelerate in May 2025 to build

a more agile operating model,

with clear cash delivery targets

and a disciplined focus on

operational excellence and cost

efficiency. These changes are

creating a stronger platform for

optimising investment and

enabling more effective

resource allocation towards

long-term growth. While the

programme has defined financial

targets, it is equally focused on

enabling better, faster growth.

It is supported by operating

model changes designed to

enhance Diageo’s global agility

— leveraging scale more

effectively, sharpening

investment priorities, and

accelerating decision-making.

...to position

Diageo for

long-term

growth.

Attractive financial

foundations

Driving long-term sustainable

growth is a strategic priority for

Diageo. We are committed to

gaining quality market share in a

disciplined and sustainable

manner. Diageo maintains an

attractive margin profile, with

further room for expansion. Our

business is highly cash generative, 

enabling us to reinvest behind our

brands to fuel future growth. As

Accelerate progresses, this will be

further enhanced through

consistency of cash delivery and

the ability to reinvest and allocate

resources behind growth

opportunities. This disciplined

approach strengthens our

resilience and agility in a dynamic

global environment.

Focused strategy

Diageo’s focused strategy is

centred on delivering growth by

maximising the potential of our

advantaged portfolio. We are

making meaningful progress in

an evolving consumer landscape

and challenging macroeconomic

environment, by concentrating

on what we can manage and

control. While our strategic

outcomes remain consistent, we

are sharpening their application

and pace of execution. This is

enabling us to prioritise

resources toward the most

attractive growth opportunities,

refine our portfolio choices and

position the business to emerge

stronger.

(1) IWSR, 2024 (by retail sales value)

9 Diageo Form 20-F 2025

Market dynamics

Market dynamics

Established

tailwinds

Growing LPA+ population

Rising middle class

Premiumisation

Spirits gaining share of TBA

Spirits household penetration

Potential

headwinds

Pressured consumer wallet

Cannabis

Weight-loss drugs (GLP-1s)

Gen Z(1)

US household penetration

	F20		F24
TBA	83%		88%
Spirits	49%		55%

(1) Numerator

(2) Oxford Economics

(3) NielsenIQ

(4) Numerator

(5) US Bureau of Labor Statistics

(6) IWSR, Bevtrac 2025

(7)  IWSR, Oxford Economics

Gen z behaviours

Moderation

We believe that

near-term industry

pressures are largely

cyclical and

macroeconomic driven.

We continue

to believe in the

attractive long-term

fundamentals of

our industry in an

evolving TBA landscape.

Long-term fundamentals

remain compelling. By 2035,

600 million new legal-

purchase-age consumers will

enter the market,(2) with Gen Z

becoming the first 2-billion-

strong generation.(3)

Gen Z penetration in spirits is

increasing in the United States,

primarily driven by spirits-

based ready-to-drink products

and tequila.(4) Across our key

markets, their engagement

with spirits is higher than the

average for the total drinking

population, indicating they are

entering the category earlier.(4)

They also allocate a similar

proportion of their annual

expenditure on alcohol as

other generations.(5) Recent

data shows an increase in LPA+

Gen Z consumption compared

to the levels in 2023.(6)

Our recent US research

indicates that cannabis and

GLP-1s have not yet shown

significant disruption to spirits

consumption, and we continue

to monitor them closely.

Moderation is a long-term

consumer trend, where we see

consumers choosing to drink

better not more. Between

2009-2024, international spirits

(excluding baijiu and RTDs) per

capita consumption has

remained broadly stable

(2009-2024 CAGR -0.4%), even

as total beverage alcohol

declined by 1.2%.(7) This

highlights the strength of the

spirits category and the

category's resilience in a

moderating environment;

gaining share from beer

and wine.

Moderation presents a

significant opportunity for

Diageo, the inherent versatility

of spirits makes moderation

more accessible and appealing.

We have a broad portfolio and

leadership in non-alcoholic

innovation, including Seedlip,

Ritual Zero Proof, Tanqueray

0.0, Gordon's 0.0 and Guinness

0.0. These offerings

complement our core

portfolio, support responsible

choices and position Diageo

to help shape the future

of moderation.

10 Diageo Form 20-F 2025

OUR GROWTH AMBITION

Progressing our

Growth Ambition

11 Diageo Form 20-F 2025

OUR STRATEGY

OUR STRATEGY

Unleash the power

of our brands and

portfolio…

Whisk(e)y and tequila

Our focus is to maintain our undisputed

number one value position in both the

whisk(e)y and tequila categories. To achieve

this, we are sharpening our focus on a clear

and distinctive portfolio participation

strategy across price tiers and consumption

occasions. For example, we are accelerating

recruitment into Johnnie Walker by scaling

innovation and extending the brand into new

occasions through Johnnie Walker Blonde and

Johnnie Walker Black Ruby.

Winning local portfolio

Developing a winning local portfolio enables

us to serve culturally relevant tastes and

consumption moments with authenticity.

Scaling Buchanan's Pineapple in Mexico

exemplifies this approach, infusing

Buchanan's with local flavour preferences

inspired by the popular 'Buchanita' serve. This

has successfully expanded the brand's appeal,

attracting new customers and deepening

engagement with existing ones. 

Guinness growth

Guinness remains a key strategic growth

priority for us, underpinned by consistent

double-digit net sales growth and strong

brand equity in core markets such as Great

Britain and Ireland. The brand continues to

broaden its consumer base, with innovations

such as Guinness 0.0 enhancing relevance

among more audiences. Strategic

partnerships with major global sporting

platforms and an efficient asset-light

production model enable scalable and

sustainable growth. 

…to lead and

shape consumer

trends…

	Cocktail culture We are shaping global cocktail culture, leveraging our premium portfolio and platforms like World Class, our bartending competition.
	Moderation We are well placed to serve many moderation strategies including no- and lower-alcohol offerings. Many consumers prefer to drink better, not more, which we actively champion.
	Exploration We are enabling greater discovery and personalisation through digital tools like 'What's Your Whisky', using AI to recommend serves.
	Convenience To meet demand for accessible, high- quality offerings, we have expanded our ready-to-drink portfolio with exciting innovations including Casamigos Margarita.
	With food We continue to unlock opportunities in food-led occasions by suggesting ideal pairings through digital tools like 'What's Your Cocktail'.
	Luxury Diageo Luxury Group (read more on page 15) focuses on accelerating growth in the super-premium segment through exceptional brands such as Johnnie Walker Blue Label and Don Julio 1942.

…executed

with operational

excellence

Our strategic priorities are underpinned by:

1.Evolving brand building muscle: to

optimise effectiveness of our A&P by

prioritising resource allocation into the

right brands, in the right markets, through

the most impactful channels.

2.Enhancing commercial excellence: by

strengthening execution partnerships,

enhancing end-to-end brand experiences

and embedding digital innovation across

our merchandising and sales processes.

3.Accelerated productivity: by enhancing

Revenue Growth Management capabilities

and supply chain excellence.

To improve our operational efficiency, we

have introduced the first phase of our

Accelerate programme. This includes the

following goals:

1.Consistent cash delivery: we expect to

sustainably deliver c.$3bn free cash flow

per annum from fiscal 26, increasing as

business performance improves.

2.Cost savings: c.$625m cost savings

programme over three years which will

enable both reinvestment in future growth

and improved operating leverage.

3.Commitment to deleveraging: we expect

to be well within the leverage target range

of 2.5-3.0x net debt to adjusted EBITDA no

later than fiscal 28, providing us with a lot

more flexibility. This will be delivered

through a combination of organic growth

and positive operating leverage, combined

with tighter capital discipline, and

appropriate and selective disposals over

the coming years.

12 Diageo Form 20-F 2025

Our strategy continued

Our strategy in action

WHISK(E)Y and tequila

Don Julio Presents 194GOU             

   

This year, Don Julio 1942 teamed up with renowned DJ, producer and cultural

powerhouse Peggy Gou to release its first ever collaborative limited-time

product – a special edition bottle called 194구 ('194Gou'). The new bottle is a

striking take on the luxury Don Julio 1942 bottle, fusing heritage with nightlife

and music culture.

The launch was an example of executing on our commitment to take tequila

around the world. We hosted exclusive pop ups, after parties, and retail

takeovers in cities including New York City, London, Milan and Seoul.

Events featured bespoke Don Julio 1942 cocktails, surprise DJ sets, Don Julio

194구 merchandise and bottle signings. This went hand-in-hand with a

culture-first social campaign, which has received more than 52 million views,(1)

and allowed fans to follow the launch in real time.

This first of its kind collaboration has been successful with global consumers.

Don Julio 194구 sold out at events in the United States, Asia Pacific and

Europe, whilst dedicated retail builds inside airports in Europe and the United

Arab Emirates are experiencing a significant sales increase versus Don Julio

1942 sales for the same period last year. 

The success of this partnership has ensured the brand is culturally relevant

with consumers, whilst also driving halo demand for Don Julio across the

globe.

(1) GALE (the campaign PR agency)

WINNING LOCAL PORTFOLIO

The Sweeter Side of Johnnie Walker

Black Label

 

Johnnie Walker has reimagined the whisky scene in Latin America and

Caribbean (LAC) with the launch of Johnnie Walker Black Ruby – a sweeter

take on Johnnie Walker Black Label, created to elevate classic cocktails.

Countering preconceptions about the ‘typical scotch drinker’, the team saw

this as opportunity to evolve the flavour of the product, opening it up to a

new generation.

Given the target market, the launch strategy was focused on local events

popular with younger LPA+ consumers including Mexico Fashion Week and

Puerto Rico Cocktail Week. Bartenders were briefed to use Johnnie Walker

Black Ruby to put a twist on classic cocktails.

Across the board, Johnnie Walker Black Ruby has successfully recruited

consumers in LAC back into scotch through exploration, sourcing 72% of volume

from outside of scotch (2) 73% of Mexican consumers who have tried Black Ruby

have repeated purchase.(2) This expansion of the Johnnie Walker family has

overturned whisky stereotypes in LAC, demonstrating the part the brand can

play in contemporary nightlife. And, given the success of the launch, we are

starting the global roll out of Johnnie Walker Black Ruby, bringing this new take

on our classic scotch worldwide.

(2) Kantar IDD Mexico 2024 (claimed data)

13 Diageo Form 20-F 2025

The Chicago Plumbers Union Local 130, with ongoing support from Guinness, has been responsible

for dyeing the Chicago River green for the city's St. Patrick's Day since 1962. They use an eco-friendly

vegetable-based dye, turning the river into a shimmering emerald tribute. This ritual has become

more than a tradition—it’s the heartbeat of the city’s celebration. And when the work is done, they

gather with a pint of Guinness, reflecting on the legacy they keep alive, one green wave at a time.

guinness GROWTH

Guinness' Lovely Day 

in the United States

 

It is an exciting time for Guinness in the United

States. In the second half of fiscal 25, it was the

fastest growing major beer brand in the on-

trade by volume,(1) and the number one draft

beer in major metropolitan areas like Boston

and New York.(1) 

We have worked strategically to reach this level

of success, but there is still a significant runway

for growth – a cornerstone of building on the

momentum this fiscal is the 'A Lovely Day' US

Campaign, launched in April 2025.

The campaign, which has received 474 million(2)

impressions and counting, merges the success of

the iconic 'Lovely Day for a Guinness' tag line,

with a uniquely American perspective, sharing

50 real stories illustrating the role of Guinness

and Guinness 0.0 in celebrations.

From Michigan ice fishermen to a Louisiana brass

band, to the roller-skating dads of Pennsylvania,

these stories capture both the American spirit

and the communion of Guinness. 

Hand-in-hand with the campaign, we created a

limited-edition Guinness Draught Stout can,

tapping into the consumer trend of

convenience. The design reimagines the classic

Lovely Day toucan art with a modern, American

twist.

Market testing has found that this campaign has

resonated strongest with younger LPA+ beer

drinkers, our target audience for expansion,

with one-third expressing intent to purchase

Guinness after viewing the campaign.

Whilst this is just the foundation of our plans to

capture further growth, the campaign is

meaningfully building brand equity and driving

household penetration with key consumers.

(1) Nielsen CGA L12Wks ending 17 May 2025

(2) Taylor (the campaign PR agency)

Find out more at www.diageo.com

Consumer trends key
	Cocktail culture		Exploration		With food
	Moderation		Convenience		Luxury

14 Diageo Form 20-F 2025

our strategy continued

OUR BUSINESS MODEL

Operational excellence runs through our business model

What we do	1. We source	2. We innovate	3. We make
	From smallholder farmers in Africa and Mexico, to multinational companies, we work with our suppliers to procure high-quality raw materials and services, with sustainability in mind. Where it is right for our business, we grow and source locally.	Using our deep understanding of consumer trends and socialising occasions, we focus on driving sustainable innovation that provides new products and experiences for consumers; be that a non- alcoholic option, an offering that suits convenience or improving the on-trade experience.	We distil, brew and bottle our spirits and beer brands through a globally co- ordinated supply operation, working to the highest quality and manufacturing standards. We prioritise using local production where it is right for our business.

Fiscal 25 progress

This fiscal, we have developed,

established and executed

substantial projects as we strive to

continually improve on our track

record of operational excellence.

Commercial excellence: Stepping up our route-to-market and

commercial execution in the United States

This fiscal, our spirits organisation in the United States has undergone its biggest

transformation in over a decade, evolving how we work with our distributors to achieve

sustainable growth.

Over the past year, we have collaborated with our partners to add new brand building

and sales roles in key geographies. These roles are dedicated to our key categories,

whisk(e)y and tequila, and the outlets with the greatest potential for growth. Our

teams are equipped with training, tools and insights to grow these categories for the

retailer, while increasing Diageo’s share.

We also launched the Academy for Beverage Leadership (ABL) to provide foundational

training for business development managers at Diageo and our distributors. Upon

completion, sales leaders have practical skills to help customers grow their whisk(e)y

and tequila businesses.

15 Diageo Form 20-F 2025

Creating value

Our business model allows us to create

value across three main areas:

Financial – for our investors

Human – for our people, suppliers,

customers and consumers

Social – for our communities

Our stakeholders
	Our people		Customers		Communities		Government and regulators
	Consumers		Suppliers		Investors
	Read more on pages 86-89.

4. We transport	5. We sell to customers	6. We market to consumers	7. We help consumers celebrate
We move our products to where they need to be in the world; be that from a local distillery in market or shipping scotch.	We grow by working closely with our customers. Our global and local sales teams use our data, digital tools and insights to extend our sales reach, improve our execution and help generate value for us and for our customers. When our customers grow, we grow too.	We invest in world-class marketing to build vibrant brands that resonate with our consumers. To do this responsibly, we have our rigorous Diageo Marketing Code which guides everything we do.	We continually evolve our data tools to understand consumers’ attitudes and motivations. We convert this information into insights which enable us to respond with agility to our consumers’ interests and preferences.

Accelerated productivity: Digitising our

supply chain through SIP

This fiscal, we have made significant progress digitising our

supply chain from grain to glass with the deployment of our

Scotch Intelligence Platform (SIP). This includes:

•Optimising pre-bottling allocations – maximising the value

of our premium whiskies through a digital marketplace.

•Maturation performance – using data and AI to target the

‘angels' share’ and improve maturation yield.

•Liquid logistics – synchronising our cask-to-bottle flows of

wood and whisky.

This platform has measurable benefits for Diageo,

augmenting the craft of our scotch category and improving

our productivity and performance.

Evolve brand building muscle: Creating the

Diageo Luxury Group

In November, we established the Diageo Luxury Group,

bringing together our most premium offerings within spirits,

brand homes and private client experiences.

The Diageo Luxury Group unites a premium brand portfolio,

as we aim to become the number one luxury spirits company

in the world. It is responsible for Diageo's luxury strategy and

accelerating the growth of brands that retail at $100 and

above, as well as leading luxury experiences and an

extensive network of expert craftspeople.

Since its creation, product launches have included Johnnie

Walker Ice Chalet, The Twelve by Casks of Distinction,

Talisker 45-Year-Old and Johnnie Walker Vault x Olivier

Rousteing.

16 Diageo Form 20-F 2025

OUR PERFORMANCE

Monitoring performance and progress

Reported measures

Net sales growth (%) Operating profit growth (%) Basic earnings per share (cents)

Definition
Sales growth after deducting excise duties.	Operating profit growth, including exceptional operating items.	Profit attributable to equity shareholders of the parent company, divided by the weighted average number of shares in issue.

Non-GAAP measures

Organic net sales growth (%)(1)			Organic operating profit growth (%)(1)			Earnings per share before exceptional items (cents)(1)
1.7%			(0.7)%			164.2

Definition
Sales growth after deducting excise duties, excluding the impact of exchange rate movements, hyperinflation adjustment and acquisitions and disposals.	Organic operating profit growth is calculated on a constant currency basis, excluding the impact of exceptional items, certain fair value remeasurement, hyperinflation adjustment and acquisitions and disposals.	Profit before exceptional items attributable to equity shareholders of the parent company, divided by the weighted average number of shares in issue.
Why we measure
This measure reflects our delivery of sustainable top-line growth. Organic net sales growth is the result of the choices we make between categories and market participation, and reflects Diageo's ability to build brand equity, increase prices and grow market share.	The movement in operating profit measures our delivery of increasing operating leverage and optimising returns. Consistent operating profit growth is a business imperative, driven by investment choices, our focus on driving out costs across the business and improving mix.	Earnings per share reflects the profitability of the business and how effectively we finance our balance sheet. Eps measures our delivery of optimised returns over time.
Performance
Reported net sales of $20.2 billion declined 0.1% due to unfavourable foreign exchange of (0.6)% and acquisition and disposal adjustments of (1.1)%, partially offset by hyperinflation adjustments and organic net sales growth. Organic net sales growth of 1.7% was driven by organic volume growth of 0.9% and positive price/mix of 0.8%. Excluding the impact of the Cîroc transaction, organic net sales growth was 1.5%, with 0.8% volume growth and 0.7% price/mix.(1)	Reported operating profit declined 27.8% and reported operating profit margin declined 819bps, primarily due to exceptional impairment and restructuring costs, unfavourable foreign exchange and a decline in organic operating margin. Organic operating profit declined by 0.7%; organic operating profit margin declined 68bps, mainly due to continued investment in overheads, partly offset by slight gross margin expansion. Excluding the impact of the Cîroc transaction,(1) organic operating profit declined 1.0%, in line with prior guidance, and organic operating margin declined 70bps.	Basic EPS decreased 67.3 cents, mainly driven by higher impairment charge in fiscal 25, a significantly lower Moët Hennessy contribution and unfavourable foreign exchange. Basic EPS before exceptional items declined 8.6% from 179.6 cents to 164.2 cents, primarily driven by a significantly lower associate income from Moët Hennessy and unfavourable foreign exchange.

Read more on page 21. Read more on page 21. Read more on page 21.

(1) On 7 April 2025, Diageo entered into a strategic partnership with Main Street Advisors. As part of the transaction, Diageo transferred its majority ownership interest in Cîroc in North America in

exchange for interest in Lobos 1707 Tequila globally. The transaction was completed in June 2025. As a result, Cîroc in North America is no longer consolidated in the group’s financial statements

and is now accounted for as an investment in associate.

17 Diageo Form 20-F 2025

Reported measures

Net cash from operating activities ($ million) Return on closing net assets (%) Remuneration

Key Performance Indicators, which are

included within incentive plans to assess

performance for Directors' remuneration

purposes. More details can be found from

page 108.

KPI: Key Performance Indicator

Definition
Net cash from operating activities comprises the net cash flow from operating activities as disclosed on the face of the consolidated statement of cash flows.	Profit for the year divided by net assets at the end of the financial year.

Non-GAAP measures

Free cash flow ($ million)(1),(2)			Return on average invested capital (ROIC) (%)		Total shareholder return (TSR) (%)
2,748			13.7%		(24)%

Definition
Free cash flow comprises the net cash flow from operating activities aggregated with the net cash expenditure paid for property, plant and equipment, and computer software.	Profit before finance charges and exceptional items attributable to equity shareholders divided by average invested capital. Invested capital comprises net assets excluding net post-employment benefit assets/liabilities, net borrowings and non-controlling interests.	Percentage growth in the value of a Diageo share (assuming all dividends and capital distributions are re-invested).
Why we measure
Free cash flow is a key indicator of the financial management of the business. Free cash flow reflects the delivery of cash generated by the business to fund payments to our shareholders and future growth.	ROIC is used by management to assess the return obtained from the group’s asset base. Over time, ROIC reflects optimised returns, as the returns Diageo generates from its asset base are both reinvested in the business and used to generate returns for investors through dividends and return of capital programmes.	Diageo’s directors have a fiduciary responsibility to maximise long-term value for shareholders. TSR measures reflects the returns Diageo has delivered to investors in the year and over time. We also monitor our relative TSR performance against our peers.
Performance
Net cash from operating activities was $4,297 million, an increase of $192 million compared to fiscal 24. Free cash flow increased by $139 million to $2,748 million. Free cash flow growth was driven by solid working capital management including higher creditors and lower maturing stock movement year on year. Net capital expenditure in fiscal 25 was $1,549 million (fiscal 24: $1,496 million) to support supply capacity expansion projects, North America supply chain transformation and furthering digital capability.	ROIC was 13.7% (fiscal 24: 15.8%) with the decrease driven mainly by lower associate income from Moët Hennessy and unfavourable exchange.	TSR was down 24% over the past 12 months driven by the lower year-on-year share price.

Read more on page 22. Read more on page 22.

(1)Organic net sales growth, organic operating profit growth, earnings per share before exceptional items, free cash flow and return on average invested capital are non-GAAP measures. See

definitions and reconciliation of non-GAAP measures to GAAP measures on pages 213-220.

(2)For reward purposes this measure is further adjusted for the impact of exchange rates, hyperinflation adjustment and other factors not controlled by management, to ensure focus on our

underlying performance drivers.

18 Diageo Form 20-F 2025

OUR PERFORMANCE continued

Non-financial performance

Positive drinking			Employee engagement index		Inclusion and diversity
			83%

Number of people educated on the dangers of underage drinking through a Diageo supported education programme	2.0m
	(2024: 2.2m)
	Total to date:
	8.2m

Percentage of female leaders globally	43%
	(2024: 44%)
Percentage of ethnically diverse leaders globally	46%
	(2024: 46%)

Target		Ambition
10 million people educated on the dangers of underage drinking by 2030, starting from fiscal 18.		50% female and 45% ethnically diverse global leader representation by 2030
Definition
Number of people educated on the dangers of underage drinking through a Diageo supported education programme.	Measured through our Your Voice survey; includes metrics for employee satisfaction, advocacy and pride.	The percentage of women and the percentage of ethnically diverse individuals who are in Diageo leadership roles globally.
Why we measure
We want to change the way the world drinks for the better by promoting moderation and addressing the harmful use of alcohol. We build credibility and trust by transparently reporting the total number of people educated on the dangers of underage drinking. This figure also demonstrates our commitment to engaging people on the dangers of harmful alcohol use.	Employee engagement releases the full potential of our people and our business, and it’s a key enabler to our performance. The survey allows us to measure the extent to which employees believe we are living our values and is one of the measures of our culture. Reflecting on the results of our employee engagement level and taking action on important areas where needed each year helps us build credibility and trust with our people.	Building an inclusive and diverse culture helps drive commercial performance and ensures we access the best talent. Transparently reporting the gender and ethnic diversity of our leadership cohort reflects our commitment to consistent value creation through our diverse workforce.
Performance
Globally, we educated 2.0m young people about the dangers of underage drinking, with strong performance again in Latin America and Caribbean (LAC).	This year 86% of our people completed our Your Voice survey. 83% were identified as highly engaged. 90% declared themselves proud to work for Diageo, 83% would recommend Diageo as a great place to work and 76% were extremely satisfied with Diageo as a place to work.	This year, 43% of our leadership roles were held by women and 46% of our leaders were ethnically diverse.

Read more on pages 44-45. Read more on pages 40-41. Read more on pages 58-59.

19 Diageo Form 20-F 2025

Non-financial performance

Water efficiency(1)			Scope 1 and 2 greenhouse gas emissions(1)
Change vs baseline year			Change vs baseline year
(15.8)%			(18.8)%

Target	Target
30% reduction versus 2020 baseline year by 2030	50% reduction versus 2022 baseline year  by 2030
Definition
Percentage change in the water efficiency index across the company compared to fiscal 20 baseline.	Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 22 baseline.
Why we measure
Our water efficiency programme is critical to addressing water security, particularly in water-stressed areas. In addition to preserving our licence to operate, minimising water use within our own operations underpins our commitment to delivering long-term value by future-proofing our business against the impacts of a changing climate. It also helps to ensure this precious resource can continue to be shared with the communities we live and work amongst.	Mitigating our impact on climate change is a business imperative. Reporting on our efforts to reduce Scope 1 and 2 greenhouse gas emissions demonstrates our commitment to reducing our contribution to global warming and helps build credibility and trust. This is an important area for our business and external stakeholders, supporting our commitment to consistent value creation by future-proofing our business.
Performance
This year, our water efficiency across the company improved in total by 15.8% since our fiscal 20 baseline. The most significant drivers of the strong performance in fiscal 25 were the continuous improvement initiatives delivered in our East Africa beer sites, Scotland distilleries and our Runcorn and St. James's Gate beer sites.	Our Scope 1 and 2 greenhouse gas emissions reduced in total by 18.8% from our fiscal 22 baseline. The main drivers contributing to the lower emissions this year are the increased use of liquid biofuel at our Scotland distilleries and energy efficiency improvements at our distilleries, breweries and packaging sites in our biggest energy consuming markets.

Read more on pages 52-53. Read more on pages 53-55.

(1)In accordance with Diageo’s environmental reporting methodologies and, where relevant, WRI/WBCSD GHG Protocol; data for the baseline year and for the intervening period up to the end of

last financial year has been restated where relevant.

20 Diageo Form 20-F 2025

SUMMARY FINANCIAL REVIEW

Summary Financial

Review

Reported net

sales growth

(0.1)%

Reported operating

profit growth

(27.8)%

Reported operating

profit margin

21.4%

Net cash from

operating activities

$4,297m

Return on closing 

net assets

19.3%

Basic earnings

per share

105.9c

Total shareholder

return

(24)%

Organic net

sales growth(1)

1.7%

Organic operating

profit growth(1)

(0.7)%

Organic operating

profit margin(1)

28.0%

Free cash

flow(1)

$2,748m

Return on average

invested capital(1)

13.7%

Earnings per share before

exceptional items(1)

164.2c

(1)Organic net sales growth, organic operating profit growth, organic operating profit

margin, earnings per share before exceptional items, free cash flow and return on

average invested capital are non-GAAP measures. See definitions and reconciliation of

non-GAAP measures to GAAP measures on pages 213-220.

21 Diageo Form 20-F 2025

Net sales

Reported net sales for the full year were down 0.1% to $20,245 million

(fiscal 24: $20,269 million) and were impacted by unfavourable foreign

exchange of $119 million (-0.6%) and acquisition and disposal

adjustments reduced this by $229 million (-1.1%), partially offset by

hyperinflation adjustments of $53 million.

Organic net sales grew $338 million or 1.7% with organic growth in four

of the five regions, including in North America, where Don Julio,

Guinness and Crown Royal were the standout performers. Growth was

supported by positive price/mix of 0.8% and 0.9% volume growth.

Volume increased in three of the five regions, with continued pressure

in North America and Europe. There was positive price/mix in four of

the five regions, but negative price/mix in Asia Pacific driven by

consumer downtrading in South East Asia and China and unfavourable

market mix with strong volume performance in India. The four

percentage points of phasing which favourably benefitted Q3 organic

net sales growth rate mostly reversed in Q4 fiscal 25.

Excluding the impact of the Cîroc transaction organic net sales growth

was 1.5%, with 0.8% volume and 0.7% price/mix.(1)

Cost of sales

Cost of sales broadly flat on a reported basis at $7,997 million (fiscal

24: $8,014 million), the positive impact of productivity savings offset

moderating inflationary pressure.

Marketing

Marketing investment declined by 0.8% on a reported basis to $3,662

million (fiscal 2024: $3,691 million), reflecting a reinvestment rate of

18.1% (fiscal 2024: 18.2%). On an organic basis, investment was flat as

we strategically reshaped our A&P spend across regions, prioritising

high-growth opportunities and demonstrating agility in resource

allocation with a focus on reducing development spend. Development

costs were reduced to 14% in fiscal 25 (fiscal 24: 21%), this reduction

was driven by the accelerated adoption of AI-enabled content creation

(Virtual Content Studios) and operational model changes, including the

launch of Agile Brand Communities and Conscious Create teams, which

encourage improved co-creation and collaboration.

Other operating items

Other operating items before exceptional items increased by 10% to

$2,882 million (fiscal 24: $2,619 million), largely driven by higher staff

costs, including incentives and wage cost inflation, as well as strategic

investments in RTM changes in the United States.

Exceptional operating items increased to $1,369 million (fiscal 24: $56

million (exceptional operating income)) largely driven by impairment,

including $458 million in respect of Diageo's investment in various

Distill Ventures business, as a result of the strategic decision to exit

Distill Ventures, and $231 million in respect of Aviation American Gin.

Exceptional operating items also included restructuring costs of $225

million relating to charges for the Accelerate programme and supply

chain agility programme. The distribution model change in France

resulted in an exceptional operating charge of $145 million.

Operating profit

Organic operating profit declined by 0.7%, with operating margin down

68bps organically, mainly due to higher overheads partly offset by a

slight improvement in gross margin. Reported operating profit declined

27.8% and reported operating profit margin declined 819bps, primarily

due to exceptional costs including impairment and restructuring costs,

unfavourable foreign exchange and a lower operating margin.

Excluding the impact of the Cîroc transaction, organic operating profit

and operating margin declined 1.0% and 70bps respectively.(1)

Non-operating exceptional items

In the year ended 30 June 2025, exceptional non-operating items were

a loss of $220 million, mainly driven by the loss on the sale of Guinness

Nigeria PLC ($125 million) and loss on the prospective sale of Guinness

Ghana Breweries PLC ($114 million).

Net finance charges

Net finance costs were $771 million (fiscal 24: $885 million), with the

decrease driven by the capitalisation of borrowing costs on capital

expenditure and the reduced costs of cash management swaps.

Taxation

The income tax charge of $999 million (fiscal 24: $1,294 million)

represented an effective tax rate of 29.9% (fiscal 24: 25.6%). The

effective tax rate before exceptional items was 24.9% (fiscal 24:

25.1%).

Share of after tax results of associates and joint

ventures

Share of after tax results of associates and joint ventures declined by

53.4% to $193 million (fiscal 24: $414 million), largely due to a

significantly lower Moët Hennessy contribution.

Profit attributable to non-controlling interest

Profit attributable to non-controlling interests was $184 million (fiscal

24: $296 million), driven mainly by the lapping of exceptional items in

Shui Jing Fang in the prior year.

Basic earnings per share (EPS)

Basic EPS before exceptional items declined 8.6% from 179.6 cents to

164.2 cents, primarily driven by a significantly lower associate income

from Moët Hennessy and unfavourable foreign exchange. This was

calculated using a weighted average number of shares in issue

excluding own shares of 2,222 million (fiscal 24: 2,234 million).

(1) On 7 April 2025, Diageo entered into a strategic partnership with Main Street Advisors. As part of the

transaction, Diageo transferred its majority ownership interest in Cîroc in North America in exchange for

interest in Lobos 1707 Tequila globally. The transaction was completed in June 2025. As a result, Cîroc in

North America is no longer consolidated in the group’s financial statements and is now accounted for as an

investment in associate.

22 Diageo Form 20-F 2025

SUMMARY FINANCIAL REVIEW continued

Net cash flow from operating activities and free

cash flow

Net cash from operating activities was $4,297 million, an increase of

$192 million compared to fiscal 24. Free cash flow increased by $139

million to $2,748 million.

Free cash flow growth was driven by solid working capital management

including higher creditors and lower maturing stock movement year on

year.

Net capital expenditure in fiscal 25 was $1,549 million (fiscal 24:

$1,496 million) to support supply capacity expansion projects, North

America supply chain transformation and furthering digital capability.

Return on average invested capital (ROIC)

ROIC was 13.7% (fiscal 24: 15.8%) with the decrease driven mainly by

lower associate income from Moët Hennessy and unfavourable exchange.

Net debt

As at 30 June 2025, the group's net debt was $21,854 million (fiscal 24:

$21,017 million), the increase was mainly due to foreign exchange

movement on non-US dollar debt.

Tariff update

Update on implications of tariff implementation and developments

We have continued to undertake considerable contingency planning in recent months and are focused on what we can control in relation to

tariffs. Assuming the current 10% tariff remains on UK and 15% European imports into the US, that Mexican and Canadian spirits imports into

the US remain exempt under the United States - Mexico - Canada Agreement (USMCA), and that there are no other changes to tariffs, the

unmitigated impact of these tariffs is estimated to be c.$200 million on an annualised basis.

As a result of our extensive supply chain and broad and advantaged portfolio, we have undertaken a number of actions to help mitigate the

potential impact including inventory management, supply chain optimisation and re-allocation of investments. Given the actions to date and

before any pricing, we expect to be able to mitigate around half of this impact on operating profit on an ongoing basis. Looking ahead, we will

continue to work on measures to mitigate this impact further. Our long track record of managing international tariffs gives us confidence in our

ability to navigate this successfully. The expected impact of tariffs on the above basis for fiscal 26 is included in our guidance.

23 Diageo Form 20-F 2025

Reshaped priorities for sustainable growth

Reshaped priorities to

Deliver sustainable

top-line growth

Increase operating

leverage

deliver sustainable

long-term performance

Read more from page 10.

Optimise returns

Maximise

cash flow

Accelerate programme

Accelerate: to deliver

sustainable

consistent

performance, first

phase underway

$3bn

Consistent cash delivery c.$3bn

free cash flow per annum from

fiscal 26, increasing as

performance improves

Operating model

More agile global

operating model to

optimise investment and

allocate resources

effectively towards

long-term sustainable

growth

Cost savings target

c.$625m

in cost savings

programme, evenly over

3 years, to enable

reinvestment in future

growth and improved

operating leverage

Deleveraging

To be well within

leverage target range of

2.5–3.0x net debt to

adjusted EBITDA no later

than fiscal 28 providing a

lot more financial

flexibility, and supported

by selective disposals

We aim to strengthen

Diageo for the future by

increasing agility,

driving sustainable

outperformance and

increasing operating

leverage

A&P

Trade spend optimisation

Overheads

Supply

c.50% dropping

through to bottom

line

c.50% re-invested

for future growth

Accelerate - strengthening Diageo for the future

In May 2025, we launched the first phase of our Accelerate programme to create a more agile operating model, with clear cash delivery targets and

a disciplined focus on operational excellence and cost efficiency. This change in how we do business is creating a stronger platform to optimise

investment and is helping us allocate resources effectively towards long-term sustainable growth. The programme has been rolled out globally and

is progressing well.

From fiscal 26, we aim to sustainably deliver c.$3 billion in free cash flow per annum, with further increases expected as business performance

improves. We expect this to be supported by positive operating leverage from fiscal 26, reduced capital expenditure (down from around 7.7% of net

sales in fiscal 25 to a mid-single-digit percentage over three years), and improvements in working capital, particularly in receivables and stock,

including opportunities on maturing stock without compromising long-term growth.

This transformation is not just about cost efficiency, it is about enabling better, faster growth. Our operating model changes are designed to

enhance Diageo’s global agility by leveraging our scale more effectively, sharpening investment priorities, and accelerating decision-making. These

efforts are closely linked to our internal drive to embed a mindset of everyday productivity across the organisation.

We expect to deliver approximately c.$625 million in cost savings over the next three years through efficiencies in A&P, overheads, supply chain,

and trade investment. Around c.50% of these savings are expected to contribute to operating profit, with the remaining c.50% reinvested in growth

areas such as digital and commercial capabilities.

We expect to be well within the leverage target range of 2.5-3.0x net debt to adjusted EBITDA no later than fiscal 28, which will provide much

more financial flexibility. We intend to deliver this through a combination of organic growth and positive operating leverage, combined with tighter

capital discipline, and appropriate and selective disposals over the coming years.

24 Diageo Form 20-F 2025

BUSINESS REVIEW

Our global reach

Our regional profile maximises the opportunity for growth in our sector. Where our products are sold each market is

accountable for its own performance and driving growth.

% share of reported net sales by region(1)(2)

Europe

24%

North America

40%

Latin America and Caribbean

9%

Asia Pacific

18%

US Spirits

Diageo Beer Company (DBC) USA

Canada

Other (principally Travel

Retail)

Brazil

Mexico

CCA (Central America and Caribbean)

Andean

South LAC

Other (principally

Travel Retail)

East Africa

South-West-Central Africa

Other

Africa

9%

India

Greater China

Australia

South East Asia

North Asia

Travel Retail Asia

Great Britain

Southern Europe

Northern Europe

Ireland

Türkiye

Eastern Europe

Other (principally Travel Retail)

MENA

(1) The above map is intended to illustrate general geographic regions where Diageo has a presence and/or in which its products are sold. It is not intended to imply that Diageo has a presence in

and/or that its products are sold in every country or territory within a geographic region.

(2) Based on reported net sales for the year ended 30 June 2025. Does not include corporate net sales of $135 million (2024 – $123 million).

Fiscal 25	North America	Europe	Asia Pacific	Latin America and Caribbean	Africa
Volume (EU million)	49.5	48.9	77.7	22.9	31.1
Reported net sales(1) ($ million)	7,973	4,821	3,635	1,847	1,834
Reported operating profit(2) ($ million)	2,222	823	890	509	283
Operating profit before exceptional items(3) ($ million)	3,053	1,302	930	528	283
Water efficiency index, percentage change compared to fiscal 20 baseline	5%	(17)%	(45)%	(18)%	(20)%
Percentage change in total direct and indirect greenhouse gas emissions (market/net based) compared to fiscal 22 baseline	(23)%	13%	(38)%	(62)%	(45)%
Average number of employees(4)	3,243	10,608	8,634	4,408	2,967

(1)Excluding corporate net sales of $135 million (2024 – $123 million).

(2)Excluding net corporate operating costs of $392 million (2024 – $366 million).

(3)Excluding exceptional operating charges of $1,369 million (2024 – $56 million) and net corporate operating costs of $392 million (2024 – $366 million).

(4)Employees have been allocated to the region where they live.

25 Diageo Form 20-F 2025

Production facilities

The company owns manufacturing production facilities across the globe, including distilleries, breweries, packaging plants, maturation warehouses,

cooperages, and distribution warehouses. Diageo’s brands are also produced at plants owned and operated by third parties and joint ventures at

several locations around the world. We believe that our facilities are in good condition and working order. We have adequate capacity to meet our

current needs, and, in the beer and spirit categories, we have undertaken activities to increase our production capacity to address our anticipated

future demand.

The major facilities owned by Diageo with locations, principal activities, and products are presented in the table below as of 30 June 2025.

Location	Principal activities	Products
United Kingdom	distilling, bottling, warehousing, coopering	beer, scotch, gin, vodka, rum, ready-to-drink, non-alcoholic
Ireland	distilling, brewing, bottling, warehousing	beer, liqueur, Irish whiskey, non-alcoholic
Southern Europe	distilling, bottling, warehousing	vodka, rum, ready-to-drink, non-alcoholic
Türkiye	distilling, bottling, warehousing	raki, vodka, gin, liqueur, wine
North America	distilling, bottling, warehousing	vodka, gin, rum, Canadian whisky, US whiskey, ready-to-drink
Brazil	distilling, bottling, warehousing	cachaça, vodka, ready-to-drink
Mexico	distilling, bottling, warehousing	tequila
East Africa	distilling, brewing, bottling, warehousing	beer, rum, vodka, gin, whisky, brandy, liqueur, ready-to-drink, bottled in East Africa (scotch)
South-West- Central Africa	distilling, brewing, bottling, warehousing	beer, rum, vodka, gin, ready-to-drink
India	distilling, bottling, warehousing	rum, vodka, Indian whisky, gin, brandy, bottled in India (scotch)
Australia	distilling, bottling, warehousing	rum, vodka, gin, ready-to-drink
Greater China	distilling, warehousing	Chinese whisky, Chinese white spirits

For more details about our capital investments please see page 226.

Our route to consumer

We have five different routes to consumer models across our business.

Most of the regions employ four of the five high-level models defined

below; however, how each model operates in certain countries will

vary, as will the percentage of net sales delivered through the

respective models in each market. 

Wholesalers and Distributors

Diageo sells to a wholesaler or distributor who also sells a range of

other brands and categories directly to end outlets where consumers

can purchase our brands. Where required, this model may include a

government control board (or similar), such as in certain states in the

US and provinces and territories in Canada.

Modern Trade

Diageo sells directly to a customer who owns and manages retail

outlets, who then in turn sells to consumers via their outlets. 

eMarketplace

Diageo sells to a third-party digital marketplace customer where that

customer sells to B2B customers and consumers.

Direct to Consumer

Diageo sells directly to consumers, predominantly through portals such

as Thebar.com, which is a growing route to consumer model for our

business. It allows for direct interface with our consumers rather than

through third-party sites as in the eMarketplace model above.

Direct to Store

Diageo sells and delivers directly to end outlets rather than via a

central purchasing customer as in the Modern Trade model. This model

is less common than the other models. For example, it is used in

Ireland for beer distribution.

26 Diageo Form 20-F 2025

BUSINESS REVIEW continued

North America

North America is the largest market for Diageo and represents over one-third of our net sales. We have a well-positioned

portfolio of brands that leans into premiumisation and high-growth categories such as tequila. Our strategy is focused on

accelerating sustainable growth through data-led insights, targeted investment and excellence in innovation and our

route to market.

Key financials	2024	Exchange	Acquisitions and disposals	Organic movement	Other(1)	2025	Reported movement
	$ million	$ million	$ million	$ million	$ million	$ million	%
Net sales	7,908	(10)	(41)	116	—	7,973	1
Marketing	1,627	—	(1)	(10)	—	1,616	(1)
Operating profit before exceptional items	3,236	(149)	(40)	9	(3)	3,053	(6)
Exceptional operating items(2)	(197)					(831)
Operating profit	3,039					2,222	(27)

Markets	Organic volume movement	Organic net sales movement	Reported volume movement	Reported net sales movement
	%	%	%	%
North America(3)	(0.8)	1.5	(1.2)	0.8
US Spirits(3)	(1.3)	1.6	(1.8)	1.0
DBC USA(4)	2.6	4.8	2.7	4.9
Canada(3)	(3.2)	(0.9)	(3.3)	(3.7)

(1) Fair value remeasurements. For further details see page 33.

      (2)For further details on exceptional operating items see pages 33 and 158-160.

      (3)Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.

      (4) Certain spirits-based ready to drink products in certain states are distributed through DBC USA and those net sales are captured within DBC USA.

Key financials:

Reported net sales grew 0.8%, mainly driven by organic growth which

was partly offset by the impact of the Cîroc transaction.(5) Organic net

sales grew 1.5%, with growth in US Spirits and Diageo Beer Company

(DBC USA) offset by a slight decline in Canada. Volume declined 0.8%,

with a slight decline in US Spirits and Canada offsetting positive growth

in DBC USA, which was offset by positive price/mix of 2.3%.

Organic operating profit grew 0.3%, with marketing and supply

efficiencies and productivity savings partially offset by increased

overheads cost. Marketing spend which was targeted behind growth

drivers, Don Julio and Crown Royal Blackberry, reduced by 0.7% through

efficiencies. Operating margin of 38.3%, decreased 42bps organically.

Excluding the impact of the Cîroc transaction,(5) organic net sales grew

0.8% and organic operating profit declined 0.4%. 

US Spirits highlights(6):

Overall US Spirits net sales grew 1.6%, with positive price/mix of 2.9%

offset by slight volume decline. Overall shipment growth was 1.6

percentage points ahead of depletions growth, with some variations

across brands. US Spirits shipments grew ahead of depletions growth as

distributors replenished inventory in particular of Don Julio and Crown

Royal. We believe overall distributor inventory levels at the end of

fiscal 25 remain appropriate for the current consumer environment and

in line with historical levels.

Tequila net sales grew 16.9%, driven by Don Julio, in particular strong

growth in Don Julio Reposado, partially offset by a decline in

Casamigos. Don Julio net sales grew 41.9%, growing both spirits

industry and tequila category share, driven by the brand's cultural

relevance and successful activation. Don Julio shipments grew ahead of

depletions growth of 36% as distributors replenished inventory to levels

we believe appropriate to accommodate strong consumer demand.

Casamigos net sales declined 18% as a result of increased category

competition driving lower demand.

Crown Royal whisky net sales grew 3.8%, primarily driven by continued

strong consumer demand for Crown Royal Blackberry, launched in the

second half of fiscal 24. The innovation supported recruitment of

consumers into spirits, the category and the Crown Royal trademark.

Buchanan's net sales declined 26.0%, as the trademark lapped

innovation inventory build on Buchanan’s Pineapple in the prior year.

Depletions declined 13%. Buchanan’s scotch variants held share of the

overall scotch category.

Johnnie Walker net sales declined 10.6%, due to overall scotch

category weakness. The Johnnie Walker trademark gained share of the

scotch category and held share of total spirits, led by Johnnie Walker

Black Label and Johnnie Walker Red Label.

Vodka net sales declined 4.5%, due to increased competition in the

category from RTD formats and overall category weakness. While

Smirnoff lost category share, Ketel One gained share.

Captain Morgan net sales declined 9.3%, due to rum category

weakness. The primary Captain Morgan variant, Captain Morgan

Original Spiced, gained share of the category.

Bulleit whiskey net sales declined 7.3%. Bulleit held its share of US

spirits but lost category share due to increased competition in the US

whiskey category.

(5) On 7 April 2025, Diageo entered into a strategic partnership with Main Street Advisors. As part of the transaction, Diageo transferred its majority ownership interest in Cîroc in North America in exchange for interest in

Lobos 1707 Tequila globally. The transaction was completed in June 2025. As a result, Cîroc in North America is no longer consolidated in the group’s financial statements and is now accounted for as an investment in

associate.

(6) Spirits brands and categories excluding cocktails, which includes ready to drink, ready-to-serve and non-alcoholic variants, except where noted.

27 Diageo Form 20-F 2025

Rest of North America

DBC USA net sales grew 4.8%, driven by strong growth in Guinness

variants including Guinness Draught, Guinness Extra Stout, and

Guinness 0.0. Growth in innovations including Captain Morgan Sliced,

Smirnoff Sunny Days, and Smirnoff Shorties was partially offset by

softer Smirnoff Ice performance.

Canada net sales declined 0.9%, reflecting a weaker spirits category

amid a challenging regulatory and operational backdrop which was

partially offset by strong growth in Guinness.

28 Diageo Form 20-F 2025

BUSINESS REVIEW continued

Europe

Europe is a diverse region with a trend-leading on-trade channel and tourism hotspots, all of which offer a strong

platform for the development of our premium brands. It is also home to Diageo's biggest beer business and a

stronghold for Guinness. We hold a leadership position across major categories and markets.

Key financials	2024	Exchange	Acquisitions and disposals	Organic movement	Other(1)	Hyperinflation (2)	2025	Reported movement
	$ million	$ million	$ million	$ million	$ million	$ million	$ million	%
Net sales	4,804	(12)	(24)	15	—	38	4,821	—
Marketing	873	11	(5)	16	—	3	898	3
Operating profit before exceptional items	1,379	(34)	(10)	(32)	(14)	13	1,302	(6)
Exceptional operating items(3)	(122)						(479)
Operating profit	1,257						823	(35)

Markets	Organic volume movement	Organic net sales movement	Reported volume movement	Reported net sales movement
	%	%	%	%
Europe(4)	(4.3)	0.3	(4.7)	0.4
Great Britain(4)	(0.9)	3.5	(0.8)	6.7
Southern Europe(4)	(6.3)	(6.0)	(8.2)	(7.0)
Ireland(4)	0.1	5.5	0.3	7.0
Northern Europe(4)	(14.0)	(13.9)	(14.4)	(13.2)
Türkiye(4)	(3.7)	20.9	(3.8)	4.6
Eastern Europe(4)	1.5	1.1	1.7	2.9
MENA	1.8	2.3	1.9	2.5

(1) Fair value remeasurements. For further details see page 33.

      (2) See pages 154 and 214-215 for details on hyperinflation adjustments.

      (3) For further details on exceptional items see pages 33 and 158-160.

      (4) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see page 213-220.

Key financials:

Reported net sales grew 0.4% broadly in line with organic net sales,

which increased 0.3%. Volume decline of 4.3% was offset by price/mix

up 4.5%. Growth in Türkiye, Great Britain and Ireland was mostly offset

by Northern Europe and Southern Europe. Favourable price/mix in

Guinness in Great Britain and Ireland, coupled with Türkiye pricing

adjustments in response to inflation helped overall price/mix.

Organic operating profit declined 2.5%, driven by the global Premier

League partnership and increased investment in technology, this was

partially offset by positive price, largely driven by Türkiye. Marketing

investment grew 1.9%, ahead of organic sales growth, supporting

strong Guinness growth in Great Britain, Ireland and Eastern Europe.

Operating margin of 27.0%, decreased 80bps organically.

Market highlights:

Great Britain net sales grew 3.5%, driven by double-digit organic net

sales growth in Guinness despite temporary supply constraints. This

was partially offset by a mid-single-digit decline in spirits net sales due

to overall category weakness. In spirits, a continued focus on tequila

delivered strong growth, particularly in Casamigos. Guinness gained

category share in both the on-trade and off-trade channels, supported

by effective brand building, the Premier League partnership and very

strong momentum in Guinness 0.0. Notably, Guinness 0.0 is now the #1

non-alc beer in Great Britain and is the fastest growing non-alc beer.(5)

Following a period of decline, RTD net sales were broadly flat,

resulting from a number of initiatives implemented to stabilise

demand.

Southern Europe net sales declined 6.0%, due to performance in France

which was adversely impacted by the transition to a new distribution

model, and a broader decline in the spirits category. Diageo transitioned

distribution of its malts and luxury brands in March 2024 from its joint

venture with Moët Hennessy to direct distribution by Diageo France with

the remaining brands moved in January 2025. Despite category challenges

in the wider market, our market share of spirits grew, led by Johnnie

Walker and Don Julio and supported by strong activation.

Ireland net sales grew 5.5%, driven by the continued growth of Guinness.

Strong share gain in the on-trade in Guinness was supported by effective

brand building and the continued roll-out of Guinness 0.0 Draught which

is now in more than 2,300 on-trade outlets. The market also delivered

market share gain in spirits and TBA in a declining environment,

supported by strong in-market execution. 

Northern Europe net sales declined 13.9%, primarily driven by strategic

scotch pricing in Germany which negatively impacted performance.

While the overall spirits category remained challenging, share gains

were delivered across key categories including gin, rum, tequila and

liqueurs.

Türkiye net sales grew 20.9%, primarily driven by pricing adjustments

in response to inflation. This resulted in a 3.7% volume decline, mainly

in raki, as tight monetary policy and stagnant minimum wages slowed

consumption. Despite the challenging environment, Johnnie Walker,

Gordon's and Baileys delivered strong double-digit volume and organic

net sales growth, supported by focused investment and targeted

pricing actions.

Rest of Europe net sales declined 0.4%, growth was impacted by the

volatile environment influenced by political conflicts in the region

which has impacted consumers; this was largely offset by strong

Guinness performance in Eastern Europe and tequila in MENA. A

dedicated MENA market was established at the end of fiscal 24 to

capture long-term growth opportunities across the region.

(5) RSV R12M Nielsen (14/06/2025)/CGA (17/05/2025).

29 Diageo Form 20-F 2025

Asia Pacific

In Asia Pacific, our focus is to grow in both developed and emerging markets across our entire portfolio. We

manage our portfolio to meet the demands of the growing middle class, and aim to inspire our consumers to drink

better, not more.

Key financials	2024	Exchange	Acquisitions and disposals	Organic movement	2025	Reported movement
	$ million	$ million	$ million	$ million	$ million	%
Net sales	3,817	(41)	(21)	(120)	3,635	(5)
Marketing	651	—	(5)	(16)	630	(3)
Operating profit before exceptional items	1,063	(11)	(7)	(115)	930	(13)
Exceptional operating items(1)	375				(40)
Operating profit	1,438				890	(38)

Markets	Organic volume movement	Organic net sales movement	Reported volume movement	Reported net sales movement
	%	%	%	%
Asia Pacific(2)	3.9	(3.2)	3.7	(4.8)
India	5.1	7.1	5.1	4.6
Greater China(2)	8.4	(9.0)	8.5	(8.9)
Australia(2)	(2.4)	(6.9)	(2.4)	(7.8)
South East Asia(2)	(3.7)	(7.0)	(3.6)	(6.0)
Travel Retail Asia(2)	(8.7)	(24.3)	(8.5)	(23.3)
North Asia(2)	(7.3)	0.9	(13.2)	(10.4)

  (1) For further details on exceptional items see pages 33 and 158-160.

    (2) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.

Key financials:

Reported net sales declined 4.8%, due to organic net sales decline, the

disposal of Windsor and unfavourable foreign exchange. Organic net

sales declined by 3.2%, due to continued macroeconomic challenges,

notably in China and South East Asia, category pressure in Travel Retail

Asia and the transition to a licence brewing model for Guinness in

Australia and New Zealand. This was partially offset by India where

performance was strong, supported by good volume growth. 

Organic operating profit declined 11.0%, driven by adverse market and

category mix, particularly the decline in Travel Retail Asia. Marketing

investment declined 2.5%, largely driven by reduced investment in

China, which was partially offset by increased spend in India.

Operating margin of 25.6%, decreased 223bps organically.

Market highlights:

India net sales grew 7.1%, driven by strong volume growth in the

Prestige & Above segment supported by positive price/mix, and

business re‑commencing in the state of Andhra Pradesh after a five-

year hiatus. Double-digit growth in Black & White, Signature and Royal

Challenge stood out along with positive growth in McDowell's.

Greater China net sales declined 9.0%, resulting from challenging

macroeconomic conditions. In response to the consumer environment

there was a deliberate strategic portfolio shift towards white spirits

and lower aged malts, which supported strong volume growth and

market share gain in international spirits, but resulted in negative

price/mix. Chinese white spirits was adversely impacted by lapping

strong double-digit growth due to last year's inventory restocking and

reduced consumption occasions across the baijiu category.

Australia net sales declined 6.9%, reflecting softness in Johnnie Walker

and in RTDs. This was partially offset by strong Guinness performance

in the first half. In the second half, Diageo transitioned its beer route-

to-market to a licence brewing model, a strategic shift to support the

long-term growth of Guinness in the market.

South East Asia net sales declined 7.0%, mainly due to a double-digit

decline in Vietnam where performance was adversely impacted by

a route‑to‑market transformation implemented in response to evolving

local market dynamics.

North Asia net sales grew 0.9%, driven by strong performance in Japan

offset by a decline in Korea given overall market weakness. Growth in

Japan was underpinned by the launch of Johnnie Walker Black Ruby

and the stabilisation of Johnnie Walker Black Label in the on and off-

trade.

Travel Retail Asia net sales declined 24.3%, due to softer consumption

and continued retail inventory destocking. Despite this, the business

gained share, driven by the Johnnie Walker portfolio and Don Julio.

30 Diageo Form 20-F 2025

BUSINESS REVIEW continued

Latin America and Caribbean

In Latin America and Caribbean (LAC), we are aiming to increase our market share through focused consumer-

centric delivery across core categories including whiskey, gin, tequila and vodka. We do this through targeted

marketing investment in consumer-focused occasions where traditionally non-spirit TBA products have had a

strong presence.

Key financials	2024	Exchange	Acquisitions and disposals	Organic movement	Hyperinflation (1)	Other(2)	2025	Reported movement
	$ million	$ million	$ million	$ million	$ million	$ million	$ million	%
Net sales	1,839	(179)	3	167	17	—	1,847	—
Marketing	306	(35)	—	26	7	—	304	(1)
Operating profit before exceptional items	502	(61)	(7)	63	1	30	528	5
Exceptional operating items(3)	—						(19)
Operating profit	502						509	1

Markets	Organic volume movement	Organic net sales movement	Reported volume movement	Reported net sales movement
	%	%	%	%
Latin America and Caribbean	3.2	9.2	3.6	0.4
Brazil	3.8	18.0	3.8	4.1
Mexico	(4.3)	5.4	(4.3)	(7.3)
CCA	7.3	6.4	7.5	6.9
Andean(4)	23.2	21.5	32.9	12.9
South LAC(4)	(2.9)	(6.3)	(2.9)	(14.1)

(1) See pages 154 and 214-215 for details on hyperinflation adjustments.

      (2)Fair value remeasurements. For further details see page 33.

      (3) For further details on exceptional items see pages 33 and 158-160.

      (4) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.

Key financials:

Reported net sales grew 0.4%, with unfavourable foreign exchange

almost fully offsetting strong organic growth. Organic net sales grew

9.2%, with volume up 3.2% and price/mix growth of 6.0%. Price/mix

benefitted from favourable comparatives given lapping prior year

promotion activity and effective pricing in Brazil due to

premiumisation. We believe that inventory levels at the end of fiscal

25 remain at an appropriate level for the current consumer

environment.

Organic operating profit increased 11.7%, driven by productivity

savings, pricing in Brazil, positive mix and reduced levels of

promotional spend. Marketing investment increased 8.7% and was

focused on core brands. Operating margin of 28.6%, increased 68bps

organically.

Market highlights:

Brazil net sales grew 18.0%, driven by volume growth and positive

price/mix. This strong performance reflects premiumisation and

strategic pricing actions, supported by a more stable consumer

environment and targeted investment. Growth was led by scotch,

particularly Johnnie Walker and Old Parr, supported by both positive

volume and price/mix. Brazil is a key strategic market for RTDs, with

Smirnoff driving strong growth through targeted investment and strong

in-market execution.

Mexico net sales grew 5.4%, as the consumer environment began to

stabilise over the year, though momentum remained subdued. Growth

was largely driven by Don Julio, primarily reflecting the lapping of

significant promotional activity in the prior year and suppressed

volume. This was partially offset by a decline in whisky, mainly

Buchanan's. 

CCA net sales grew 6.4%, given favourable scotch and tequila

performance.

Andean (Colombia and Venezuela) net sales increased 21.5%, mainly

due to Buchanan's and Old Parr, as a result of market stabilisation.

South LAC (Argentina, Bolivia, Chile, Ecuador, Paraguay, Peru and

Uruguay) net sales declined 6.3%, driven by the volatile

macroeconomic and the weakening consumer environment adversely

impacting consumption. Despite the challenging environment, the

market delivered market share gain.

31 Diageo Form 20-F 2025

Africa 

In Africa, we manage an exciting TBA portfolio. With a growing emphasis on premiumisation, we're focusing on

Scotch, vodka, gin, and tequila alongside a vibrant local spirits portfolio. We hold a leading position in premium beer

in many countries with Guinness and are expanding our footprint in the ready-to-drink category.

Key financials	2024	Exchange	Reclassification (1)	Acquisitions and disposals	Organic movement	Hyperinflation (2)	2025	Reported movement
	$ million	$ million	$ million	$ million	$ million	$ million	$ million	%
Net sales	1,778	121	(67)	(146)	150	(2)	1,834	3
Marketing	205	8	—	(13)	(8)	—	192	(6)
Operating profit before exceptional items	131	59	—	37	59	(3)	283	116
Exceptional operating items(3)	—						—
Operating profit	131						283	116

Markets	Organic volume movement	Organic net sales movement	Reported volume movement	Reported net sales movement
	%	%	%	%
Africa(4)	3.7	10.5	(3.1)	3.1
East Africa	2.0	0.1	0.0	0.1
SWC Africa(4)(5)	6.1	15.8	25.8	26.6

(1) Reclassification between net sales and cost of goods sold to accurately reflect the impact of a route-to-market change in Africa.

(2) See pages 154 and 214-215 for details on hyperinflation adjustments.

(3) For further details on exceptional items see pages 33 and 158-160.

(4) Reported volume movement includes impacts from acquisitions and/or disposals. For further details see pages 213-220.

(5) Reported volume and reported net sales movements do not include the Guinness Nigeria PLC disposal.

Key financials:

Reported net sales grew 3.1%, with strong organic net sales growth

partly offset by a reclassification as a result of route-to-market

change. Organic net sales grew 10.5%, with growth across all markets,

most notably, double-digit growth in Ghana, South Africa and

Tanzania. Volume grew 3.7% and price/mix grew 6.9%, with the latter

mainly due to pricing and premiumisation through East Africa.

Organic operating profit grew 27.7% driven by the positive impact of

pricing. Marketing investment declined by 4.4% due to efficiencies and

change in portfolio and marketing mix. Operating margin of 15.4%,

increased 232bps organically.

Market highlights:

East Africa net sales grew 7.0%, with growth delivered across Kenya,

Uganda and Tanzania. Performance was driven by strong growth in

beer, rum, and scotch, partially offset by declines in gin and vodka.

Beer delivered strong single-digit growth, led by local brands,

Serengeti and White Cap, as well as Guinness. Performance in rum was

driven by local flavour innovation on Kenya Cane. The transition to an

independent route-to-market for premium-plus-spirits supported

double-digit growth in Johnnie Walker.

SWC Africa (South, West and Central Africa) net sales grew 15.8%,

driven by double-digit organic volume and net sales growth in Ghana

supported by an improving macroeconomic environment. Double-digit

growth in Malta Guinness and Guinness was the result of increased

distribution and favourable pricing. Strong growth in Gordon's led to

share gains in the gin category in South Africa, following the change in

the route-to-market. This was partially offset by softness in Johnnie

Walker, attributed to increased competition. In the second half of the

fiscal year, a route-to-market change was implemented on Smirnoff

RTDs in South Africa, to unlock growth in one of the fastest growing

TBA categories.

32 Diageo Form 20-F 2025

Business review continued

Category and brand review

For the year ended 30 June 2025

Key categories

	Organic volume movement(1) %	Organic net sales movement %	Reported net sales movement %	Reported net sales by category %
Spirits(2)	—	—	(2)	76
Scotch	(2)	(4)	(7)	22
Tequila	15	18	17	13
Vodka(3)(4)	(4)	(5)	(9)	8
Canadian whisky	5	3	3	7
Rum(4)	(3)	(5)	(7)	5
Liqueurs	(7)	(4)	(4)	5
Gin(4)	(1)	(4)	(11)	4
IMFL whisky	7	10	8	4
Chinese white spirits	5	(8)	(8)	3
US whiskey	(8)	(9)	(9)	2
Beer	6	10	10	18
Ready to drink	4	2	—	4

Key brands(5)

	Organic volume movement(6) %	Organic net sales movement %	Reported net sales movement %
Johnnie Walker	(3)	(5)	(7)
Don Julio	41	38	37
Guinness	14	13	12
Crown Royal	4	3	3
Smirnoff	(3)	(5)	(6)
Baileys	(1)	(4)	(3)
Captain Morgan	(3)	(6)	(6)
Casamigos(7)	(16)	(16)	(16)
Shui Jing Fang(8)	5	(8)	(8)
McDowell's	2	7	4

(1)Organic equals reported volume movement except for spirits (1)%, vodka (5)%, liqueurs (8)%, gin (2)%, beer 3%, and ready to drink (2)%.

(2)Spirits brands excluding ready to drink and non-alcoholic variants.

(3)Vodka includes Ketel One Botanical.

(4)Vodka, rum and gin include IMFL variants.

(5)Brands excluding ready to drink, non-alcoholic variants and beer except Guinness.

(6)Organic equals reported volume movement, except for Guinness 11%, Baileys (2)% and Captain Morgan (4)%.

(7)Casamigos trademark includes both tequila and mezcal.

(8)Growth figures represent total Chinese white spirits of which Shui Jing Fang is the principal brand.

F-9 Diageo Form 20-F 2025

Group financial review

Business review (continued)

Corporate

Performance 2025

Sales and net sales

Corporate net sales principally arise from visitor centers and the global licensing of Diageo brands and trademarks. Corporate net

sales were $135 million in the year ended 30 June 2025, an increase of $12 million. Net sales were favorably impacted by an organic

increase of $10 million as well as by $2 million exchange rate movement gain.

Operating costs

Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as

well as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply

Chain and Procurement. Operating costs were $392 million in the year ended 30 June 2025 increased by $26 million compared to

operating costs of $366 million in the year ended 30 June 2024. The $22 million increase in costs in the year ended 30 June 2025 was

principally a result of D&T Voyager cost increase, as well as unfavorable exchange rate movement of $4 million.

Performance 2024

Sales and net sales

Corporate net sales principally arise from visitor centers and the global licensing of Diageo brands and trademarks. Corporate net

sales were $123 million in the year ended 30 June 2024, an increase of $19 million. Net sales were favorably impacted by an organic

increase of $13 million partially offset by $6 million exchange rate movement gain.

Operating costs

Corporate operating costs comprise central costs, including finance, marketing, corporate relations, human resources and legal, as

well as certain information systems, facilities and employee costs that are not allocable to the geographical segments or to the Supply

Chain and Procurement. Operating costs were $366 million in the year ended 30 June 2024 an decrease of $31 million compared to

operating costs of $397 million in the year ended 30 June 2023. The $31 million decrease in costs in the year ended 30 June 2024 was

principally a result of favorable exchange rate movements of $22 million.

33 Diageo Form 20-F 2025

Group financial review

Group financial review

Key financials - certain line items

	30 June 2024	Exceptional operating items (c)	Exchange (a)	Acquisitions and disposals (b)	Organic movement(1)	Fair value remeasurement (d)	Reclassification(2)	Hyperinflation(1)	30 June 2025
	Reported								Reported
Year ended 30 June 2025	$ million	$ million	$ million	$ million	$ million	$ million	$ million	$ million	$ million
Sales	27,891	—	(283)	(264)	570	—	—	50	27,964
Excise duties	(7,622)	—	164	35	(232)	—	(67)	3	(7,719)
Net sales	20,269	—	(119)	(229)	338	—	(67)	53	20,245
Cost of sales	(8,071)	(18)	(88)	180	(114)	30	67	(58)	(8,072)
Gross profit	12,198	(18)	(207)	(49)	224	30	—	(5)	12,173
Marketing	(3,691)	—	17	24	(2)	—	—	(10)	(3,662)
Other operating items	(2,506)	(1,407)	(10)	(2)	(260)	(17)	—	26	(4,176)
Operating profit	6,001	(1,425)	(200)	(27)	(38)	13	—	11	4,335
Other line items:
Non-operating items	(70)								(220)
Taxation (e)	(1,294)								(999)

(1) For the definition of organic movement and hyperinflation, see pages 213-220.

(2) Reclassification between net sales and cost of goods sold to accurately reflect the impact of a route-to-market change in Africa.

(i) Reported figures in the table above have been extracted from the condensed consolidated income statement for the years ended 30 June 2024 and 30 June 2025.

(ii)Acquisitions and disposals, organic movement, fair value remeasurement, reclassification and hyperinflation figures have been calculated at the prior period weighted average exchange rates.

(a) Exchange

The impact of movements in exchange rates on reported figures for

operating profit was principally due to the weakening of the Mexican

peso, the Turkish lira and the Brazilian real, partially offset by the

strengthening of the sterling against the US dollar.

The effect of movements in exchange rates and other movements on

profit before exceptional items and taxation for the year ended 30

June 2025 is set out in the table below.

	Gains/(losses) $ million
Translation impact	4
Transaction impact	(204)
Operating profit before exceptional items	(200)
Net finance charges – translation impact	(69)
Net finance charges – transaction impact	70
Net finance charges(1)	1
Associates – translation impact	2
Profit before exceptional items and taxation	(197)

(1) For more information about Finance income and charges please see page 161.

	Year ended	Year ended
	30 June 2025	30 June 2024
Exchange rates
Translation $1 =	£0.77	£0.80
Transaction $1 =	£0.80	£0.82
Translation $1 =	€0.92	€0.93

(b) Acquisitions and disposals

The acquisitions and disposals movement in the year ended 30 June

2025 was primarily attributable to the acquisition of Ritual Beverage

Company LLC, the disposals of the Pampero brand and the Cacique

brand, the new Cîroc contractual arrangement in North America and

the disposal of Guinness Nigeria PLC.

See pages 166-169 for further details.

(c) Exceptional items

In the year ended 30 June 2025, exceptional operating items were a

charge of $1,369 million due to impairment of investments in

associates and other investments, brands, tangible fixed assets,

other assets and other related charges ($910 million), charges for the

Accelerate programme, that includes supply chain agility programme

($225 million), the distribution model change in France ($145 million),

various dispute and litigation matters ($51 million) and the reversal of

rum cover-over income ($38 million). In the year ended 30 June 2024,

exceptional operating items were a gain of $56 million, mainly driven

by a net gain of $224 million due to impairment reversal, various

dispute and litigation matters (a charge of $107 million) and the supply

chain agility programme (a charge of $61 million).

In the year ended 30 June 2025, exceptional non-operating items were

a loss of $220 million, mainly driven by the loss on the sale of Guinness

Nigeria PLC ($125 million) and loss on the prospective sale of Guinness

Ghana Breweries PLC ($114 million). In the year ended 30 June 2024,

exceptional non-operating items were a loss of $70 million, mainly

driven by the loss on the sale of the Windsor business in Korea ($58

million).

In the year ended 30 June 2025, exceptional finance income was in

relation to borrowing costs capitalised of $58 million in respect of

purchases of property, plant, equipment and computer software in the

prior years.

See pages 158-160 for further details.

(d) Fair value remeasurement

In the year ended 30 June 2025, the adjustment to cost of sales of a

gain of $13 million reflects the elimination of fair value changes for

biological assets in respect of growing agave plants for the production

of tequila (2024 – $17 million loss). The adjustments to marketing and

other operating expenses of a gain of $139 million were the elimination

of fair value changes to contingent consideration liabilities and earn-out

arrangements in respect of prior year acquisitions (2024 – $156 million

gain).

34 Diageo Form 20-F 2025

GROUP FINANCIAL REVIEW continued

(e) Taxation

In the year ended 30 June 2025, Diageo changed the definition of the

reported tax rate and the tax rate before exceptional items to exclude

the share of after-tax results of associates and joint ventures from

profit before tax, as this represents post-tax profit, hence is

considered as a non-essential factor of the calculation. The

presentation of the tax rate after exceptional items and the tax rate

before exceptional items for the year ended 30 June 2024 has been

aligned to this new definition.

On this new basis, the reported tax rate for the year ended 30 June 2025

was 29.9% compared with 25.6% for the year ended 30 June 2024.

Included in the tax charge of $999 million in the year ended 30 June

2025 is a net exceptional tax credit of $214 million, including an

exceptional tax credit of $138 million in relation to brand impairments

and tangible fixed assets, a tax credit of $46 million in respect of

restructuring programmes, a tax credit of $36 million in respect of

Diageo's agreement with LVMH on the termination of their joint

operation in France, and a tax credit of $12 million in respect of

various dispute and litigation matters in North America, partially offset

by $15 million tax charge in respect of capitalised borrowing costs and

$3 million tax charge in respect of sale of businesses and brands.

Included in the tax charge of $1,294 million in the year ended 30 June

2024 is a net exceptional tax charge of $24 million, including an

exceptional tax charge of $95 million in relation to the reversal of the

Shui Jing Fang brand impairment charge, partly offset by a tax credit of

$19 million in respect of the Chase brand impairment and the related

tangible fixed assets, a tax credit of $13 million comprised of brand

impairments in the US ready-to-drink portfolio, a tax credit of $23 million

in relation to various dispute and litigation matters in North America and

a tax credit of $15 million in respect of the supply chain agility

programme.

The tax rate before exceptional items for the year ended 30 June 2025

was 24.9% compared with 25.1% for the year ended 30 June 2024.

We expect the tax rate before exceptional items for the year ending 30

June 2026 to be in the region of 25%.

(f) Dividend

The group aims to maximise its return of capital to shareholders each

year. The decision in respect of the dividend is made with reference to

the dividend policy for the respective period that includes current

performance trends, including sales, profit after tax and cash

generation. Diageo aims for dividend cover (the ratio of basic earnings

per share before exceptional items to dividend per share) within the

range of 1.8-2.2 times. For the year ended 30 June 2025, dividend

cover was 1.6 times (2024 – 1.7 times). The group will keep future

returns of capital, including dividends, under review to ensure Diageo’s

capital is allocated in the best way to maximise value for the business

and its stakeholders.

Subject to approval by shareholders, the final dividend of 62.98 cents

per share (2024 – 62.98 cents per share) will be paid to holders of

ordinary shares and US ADRs on register as of 17 October 2025. The ex-

dividend date is 16 October 2025 for holders of ordinary shares and

17 October 2025 for holders of US ADRs. Holders of ordinary shares will

receive their dividends in sterling unless they elect to receive their

dividends in US dollars by 7 November 2025. The dividend per share in

pence to be paid to ordinary shareholders will be announced on

20 November 2025 and will be determined by the actual foreign

exchange rates achieved by Diageo buying forward contracts for

sterling currency, entered into during the three trading days preceding

the sterling equivalent announcement of the final dividend. The final

dividend, once approved by shareholders, will be paid to both holders

of ordinary shares and US ADRs on 4 December 2025. A dividend

reinvestment plan is available to holders of ordinary shares in respect

of the final dividend and the plan notice date is 7 November 2025.

Movements in net borrowings and equity

Movements in net borrowings

	2025	2024
	$ million	$ million
Net borrowings at the beginning of the year	(21,017)	(19,582)
Free cash flow (1)	2,748	2,609
Movements in loans, other investments and other financial assets	(195)	(47)
Acquisitions (2)	(35)	(6)
Investment in associates (2)	(84)	(133)
Sale of businesses and brands (3)	143	87
Share buyback programme	—	(987)
Net sale of own shares for share schemes	15	21
Net sale/(purchase) of treasury shares in respect of subsidiaries	8	(10)
Dividend paid to non-controlling interests	(138)	(117)
Net movements in bonds (4)	1,527	558
Purchase of shares of non-controlling interests (5)	(9)	(223)
Net movements in other borrowings (6)	(629)	(106)
Equity dividend paid	(2,298)	(2,242)
Unclaimed dividends and share forfeiture	30	—
Net increase/(decrease) in cash and cash equivalents	1,083	(596)
Net increase in bonds and other borrowings	(898)	(453)
Exchange differences (7)	(921)	(199)
Other non-cash items	(101)	(187)
Net borrowings at the end of the year	(21,854)	(21,017)

(1) See page 217 for the analysis of free cash flow.

(2) On 24 September 2024, Diageo completed the acquisition of, and

paid $23 million, net of cash acquired, for the remaining issued share

capital of Ritual Beverage Company LLC (owner of Ritual Zero Proof

non-alcoholic spirits brand), that it did not already own. On 19 June

2025, Diageo announced that it acquired a controlling stake in Nao

Spirits & Beverages Private Limited. In the year ended 30 June 2024,

Diageo paid $6 million in respect of prior year acquisitions. In the years

ended 30 June 2025 and 30 June 2024, investment in associates

included additional investments in a number of Distill Ventures

associates.

(3) In the year ended 30 June 2025, sale of businesses and brands

included the disposal of the Cacique brand for a net cash

consideration, net of disposal costs, of $67 million, the disposal of

Guinness Nigeria PLC for a net cash consideration, net of disposal

costs, of $53 million and the disposal of the Pampero brand for a net

cash consideration, net of disposal costs, of $55 million. In the year

ended 30 June 2024, sale of businesses and brands included a net cash

consideration, net of disposal costs, of $88 million for the disposal of

Windsor Global Co., Ltd.

35 Diageo Form 20-F 2025

(4) In the year ended 30 June 2025, the group issued bonds of

€2,200 million ($2,452 million – net of discount and fee) consisting of

€700 million ($780 million – net of discount and fee) 3.125% fixed rate

notes due 2031, €300 million ($346 million – including issuance premium)

3.125% fixed rate notes due 2031, €700 million ($776 million – net of

discount and fee) 3.375% fixed rate notes due 2035, €500 million

($550 million – net of discount and fee) 3.75% fixed rate notes due

2044, $750 million ($748 million – net of discount and fee) 5.125% fixed

rate notes due 2030, $750 million ($743 million – net of discount and fee)

5.625% fixed rate notes due 2035 and repaid bonds of $600 million and

€1,600 million ($1,816 million). In the year ended 30 June 2024, the

group issued bonds of $1,700 million ($1,690 million – net of discount

and fee) consisting of$800 million 5.375% fixed rate notes due 2026,

$900 million 5.625% fixed rate notes due 2033, €500 million ($535

million – net of discount and fee) floating rate notes due 2026) and

repaid bonds of $500 million and €1,100 million ($1,167 million).

(5) In the year ended 30 June 2024, Diageo agreed with Combs Wine

and Spirits LLC to purchase the remaining 50% of the share capital of

DeLeon Holdco LLC that Diageo did not already own for a total

consideration of $223 million, including transaction costs.

(6) In the year ended 30 June 2025, the net movements in other

borrowings principally arose from the $479 million repayment of

commercial paper and $114 million repayment of lease liabilities. In

the year ended 30 June 2024, the net movements in other borrowings

principally arose from the increase in commercial paper, collateral and

bank loan balances, cash outflows of foreign currency swaps and

forwards, and repayment of lease liabilities.

(7) In the year ended 30 June 2025, exchange losses arising on net

borrowings of $921 million were primarily driven by unfavourable

exchange movements on sterling and euro denominated borrowings and

on foreign currency swaps and forwards. In the year ended 30 June

2024, exchange losses arising on net borrowings of $199 million were

primarily driven by adverse exchange movements on sterling and euro

denominated borrowings and unfavourable movements on cash and

cash equivalents, partially offset by favourable movements on foreign

currency swaps and forwards.

Movements in equity

	2025	2024
	$ million	$ million
Equity at the beginning of the year	12,070	11,709
Adjustment to 2023 closing equity in respect of hyperinflation in Ghana (1)	—	51
Adjusted equity at the beginning of the year	12,070	11,760
Profit for the year	2,538	4,166
Exchange adjustments (2)	452	(645)
Remeasurement of post-employment benefit plans net of taxation	(2)	(61)
Purchase of shares of non-controlling interests (3)	(7)	(223)
Change in non-controlling interests from sale of business	9	—
Hyperinflation adjustments net of taxation (1)	264	365
Dividend declared to non-controlling interests	(140)	(121)
Equity dividend declared	(2,298)	(2,243)
Share buyback programme	—	(997)
Other reserve movements	292	69
Equity at the end of the year	13,178	12,070

(1) See pages 154 and 214-215 for details on hyperinflation

adjustments.

(2) Exchange movements in the year ended 30 June 2025 primarily

arose from exchange gains driven by sterling. Exchange movements in

the year ended 30 June 2024 primarily arose from exchange losses

driven by the Turkish lira, the Mexican peso, sterling and the euro.

(3) In the year ended 30 June 2024, the purchase of shares of non-

controlling interests of $223 million represented the acquisition of 50%

of DeLeon Holdco LLC's share capital.

Post-employment benefit plans

The net surplus of the group’s post-employment benefit plans

increased by $35 million from $717 million at 30 June 2024 to $752

million at 30 June 2025. The increase in net surplus was predominantly

attributable to the favourable changes in the discount and inflation

rates in the UK and Ireland that was partially offset by the adverse

change in the market value of assets held by the post-employment

benefit plans in the UK and the experience loss arising from the

triennial valuation of the UK post-employment schemes.

Total cash contributions by the group to all post-employment benefit

plans in the year ending 30 June 2026 are estimated to be

approximately $45 million.

F-10 Diageo Form 20-F 2025

GROUP FINANCIAL REVIEW continued

Operating results 2024 compared with 2023

For the discussion on our operating results for the year ended 30 June 2023, including certain comparative discussion on our

operating results for the years ended 30 June 2023 and 2024, please refer to 'Operating results 2024 compared with 2023' from page

43 in our Annual Report on Form 20-F (File No. 001-10691) filed with the Securities and Exchange Commission on 1 August 2024.

36 Diageo Form 20-F 2025

Spirit of progress

Doing business the right way,

from grain to glass

We manage our business for the long-term, and have always believed that doing business the right way, from grain to

glass, builds trust and credibility with our stakeholders. 'Spirit of Progress’ is our action plan to deliver on this

commitment. We identify and monitor the most material risks and opportunities for our business, using these insights

to shape our strategy and drive change where we can have impact at scale. The plan evolves over time to ensure we

focus our resources on the most critical issues aligned with our footprint and areas of influence.

Embed integrity in everything we do

Stand up for human rights

Read more on pages 38-39.

Build and monitor our distinct culture

Protect our people through a robust

health and safety strategy

Read more on pages 40-43.

Doing Business the Right Way is core to our three ‘Spirit of Progress’ priorities

Change the way the world drinks for the

better

Address the harmful use of alcohol and

promote moderation

Responsibly market our products

Read more on pages 44-45.

Preserve the natural resources we all

depend on, building the resilience of our

business and protecting our licence to

operate

Read more on pages 46-57.

Create an environment where everyone

contributes to a better business

Read more on pages 58-59.

37 Diageo Form 20-F 2025

As our stakeholders' expectations and business evolve, so does our

assessment of material impacts, risks and opportunities and our

strategy to address them. To update our strategy, we regularly assess

stakeholder feedback, performance against targets and business needs.

While we focus on factors we can influence, external uncertainties

remain, making our roadmaps subject to change.

Each year, we conduct a review of our targets. This year, we further

considered the results of an updated ESG issues assessment(1) ahead of

compliance with the European Union’s (EU) Corporate Sustainability

Reporting Directive (CSRD) in 2028, as well as updated Science Based

Targets initiative (SBTi) emission reduction targets.

Our updated emissions reductions, regenerative agriculture and

packaging ambitions were adjusted in fiscal 25 to reflect the updated

ESG issues assessment and our new SBTi targets. The target review was

led by the Executive Committee members and approved by the Board.

How we take action and measure our performance

This section of the Annual Report sets out our progress against our

priority ‘Spirit of Progress' ambitions. In our ESG Reporting Index, we

include reporting on other goals and other actions which support

our strategy.

Doing business the right way
Key policies Code of Business Conduct Global Human Rights Policy Dignity at Work Policy Global Health, Safety and Wellbeing Policy
Promote positive drinking	Pioneer grain to glass sustainability	Champion inclusion and diversity
Key policies Global Employee Alcohol Policy Diageo Marketing Code	Key policy Global Environment Policy	Key policy Code of Business Conduct
Targets	Targets	Ambitions
Education on the dangers of alcohol misuse Underage drinking*,^ Drink driving^	Water stewardship Using water efficiently* Replenishing water for communities^ Advocating for water stewardship	Increasing the diversity of our leadership team Gender diversity* Ethnic diversity*
	Responsible sourcing Launching regenerative agriculture programmes	Promoting inclusivity through hospitality and skills education Learning for Life and other hospitality and skills programmes
	Emission reductions Reducing emissions from our operations*,^ Reducing emissions from our value chain Increasing the recycled content of our packaging

*Targets and ambitions which are included in our long-term incentive plans (through fiscal 27).

^ Targets and ambitions which are included in our long-term incentive plans (from fiscal 26). For more details refer to page 133.

Governance

Both the Board and the Executive Committee oversee ‘Spirit of Progress‘.

The Board reviews our most material topics through our ESG issues

assessment, our ESG strategy and our targets used to measure our

strategy in action. The Chief Executive is ultimately accountable for the

performance against ‘Spirit of Progress' ambitions. Each target has an

Executive Committee member accountable for the delivery with

regular performance reviews conducted by the Executive Working

Group (EWG).

New regulatory frameworks

We continue to voluntarily report against the Global Reporting

Initiative (GRI) and Sustainability Accounting Standards Board (SASB)

frameworks in our ESG Reporting Index.

We are monitoring regulation developments in both the United Kingdom

and the EU. In February 2025, the EU proposed changes to CSRD through

an Omnibus package, including a two-year delay for companies with

significant operations in the EU. We are also monitoring the 'UK

Sustainability Reporting Standards', which are aligned to International

Sustainability Standards Board (ISSB) requirements. We intend to apply

both CSRD and the UK standards as soon as required under EU and UK law.

Given the interconnectivity of climate and nature, we have

incorporated some of the Task Force for Nature-related Financial

Disclosures (TNFD) into our Task Force on Climate-related Financial

Disclosures (TCFD) reporting. 

In the United States, California has enacted the Voluntary Carbon Market

Disclosures Act, California Assembly Bill No. 1305 (AB-1305) requiring

companies operating in California to make certain disclosures regarding

carbon emissions reduction claims, and voluntary carbon offsets. We

provide disclosures pursuant to AB-1305 in this section of the Annual

Report, our ESG Reporting Index and our responses to CDP (formerly

known as the Carbon Disclosure Project) climate change questionnaire,

available through CDP's website.

Reporting transparently

We define our performance measures carefully, along with clear

reporting boundaries and methodologies. For more details, see

the website.

(1) Refer to our ESG Reporting Index, page 3, for information on our updated ESG issues

assessment, conducted with reference to the EU’s Corporate Sustainability

Reporting Directive, in advance of compliance with the directive in fiscal 28.

38 Diageo Form 20-F 2025

DOING BUSINESS THE RIGHT WAY

Business integrity and  Human rights

We want to do business the right way every day,

everywhere. We expect all stakeholders, including our

people and suppliers, to demonstrate integrity, live our

values

and behave in an ethical way as set out in

our Code of Business Conduct.

For more details, see the website www.diageo.com.

Business Integrity

A culture of business integrity is foundational to our identity and delivery

of our Growth Ambition. Each of us has a responsibility for doing

business the right way. By valuing not only what we do, but how we

conduct business, we generate success worth celebrating.

Code of Business Conduct (Our Code)

Our Code sets out the basis for how we work and conduct business.

It lists key principles which guide our day-to-day operations, decisions

and interactions with colleagues and other stakeholders. Our Code

forms what we stand for as a business and how we demonstrate our

high standards of integrity and ethical behaviour.

All Diageo employees are required to complete our Code of Business

Conduct training annually, via either routine annual training or as part

of new-joiner onboarding.

Additionally, all eligible(1) employees are required to certify that they

have read, understood and complied with our Code of Business Conduct

and supporting global policies during the previous financial year

through an annual compliance certification declaration.

The training is delivered through an interactive e-learning module,

with classroom sessions provided for those without regular

computer access.

In fiscal 25, employees engaged with our Code through local Business

Integrity Day activations. Markets shaped integrity conversations

around their local priorities, supported by global resources and

guidance. This flexibility led to more relevant, resonant sessions that

strengthened understanding, sparked meaningful dialogue, and

reinforced the everyday role of integrity in how we work.

Encouraging people to speak up

We encourage our employees to report potential breaches of our Code

or policies through our global confidential grievance and

whistleblowing service, SpeakUp. The service, which is available

through various channels (email, telephone and internet) in 20

languages, is monitored by the business integrity team to ensure that

all allegations are handled appropriately, confidentially and fairly.

Managing third-party risks

Maintaining business integrity is crucial in our interactions with third

parties. Our Know Your Business Partner (KYBP) programme is designed

to identify potential risks before entering into contractual agreements.

In fiscal 25, we enhanced our KYBP governance process and tools by

leveraging our KYBP centres of practice, which has led to greater

standardisation of our procedures.

Standing up for human rights

At Diageo, we strive to create an environment where all our people

feel they are treated fairly and with respect. We remain committed to

acting with integrity in our roles, to ensure we are doing business in

the right way. We act in line with the UN Guiding Principles on Business

and Human Rights (UNGPs) and are committed to embedding respect

for human rights into everyone’s working day, in every country

throughout our business and supply chain. Our policies cover our

responsibilities to protect the human rights of everyone working in our

direct operations, value chain and communities.

Our human rights governance

Our Code and Global Human Rights Policy play an integral part

of ensuring that Diageo’s culture is aligned with our purpose and

values. Our Code has been approved by our Board of Directors and our

Global Human Rights Policy has been approved by our Chief Executive.

Our human rights strategy is reviewed on a periodic basis by the Audit

Committee of the Board and by the Executive’s Audit and Risk

Committee (ARC) as part of our mitigation of our principal risk on

business ethics and integrity. Responsibility for delivery is shared

between the members of Diageo’s Executive Committee that are

responsible for the human rights of our employees, suppliers and

communities. Our Executives, senior business leaders and functional

specialists lead the agenda via our Human Rights Steering Group (group

and market level), and assess risks, emerging issues, compliance and

remediation within our enterprise risk management processes.

Providing access to grievance mechanisms

We encourage everyone, including any affected stakeholders, to

report potential breaches of our Code or policies, including human

rights, through our global confidential grievance and whistleblowing

service, SpeakUp.

Focusing on salient human rights risks

In fiscal 24, we refreshed our assessment of salient risks that are most

relevant to our business as specified in the Declaration on Fundamental

Principles and Rights at Work and the UNGPs. We looked at human

rights benchmarks for our industry, priority commodities in our supply

chain and the increasing interdependence between human rights and

climate impacts.

The assessment identified the following salient risks: health and

safety, wages and benefits, working time, harassment and bullying,

discrimination, freedom of association and collective bargaining, child

labour, forced labour, water sanitation and hygiene and land rights.

Whilst we conduct ongoing due diligence in all areas, we have

prioritised health and safety, wages and benefits, working time,

harassment and bullying, and discrimination based on severity,

likelihood, attribution, leverage and breach data.

Vulnerable groups

We recognise that some groups of people are more vulnerable to

human rights breaches and pay particular attention to these groups

within our risk assessments. Determined by human rights frameworks,

our value chain and human rights impact assessments, our vulnerable

groups are women, ethnic minorities, persons with disabilities, the

LGBTQIA+ community, indigenous peoples, migrant workers, contract

and temporary workers, and children.

(1) For more details, see the Non-Financial Reporting Boundaries and Methodologies, available on

our website.

39 Diageo Form 20-F 2025

Assessing risk in our direct operations

We use a variety of risk assessment tools in our direct operations to

identify risk.

This includes self-assessment questionnaires for all direct operations,

third-party human rights assessments for high-risk direct operations

and deep dive assessments for groups that we consider more

vulnerable to our salient risks. In fiscal 25, all direct operations

completed an annual self-assessment questionnaire and four high-risk

direct operations undertook a third-party assessment, keeping us on

track to assess all high-risk direct operations by the end of fiscal 27.

We use the insights from the assessments to develop action plans to

resolve material human rights concerns and strengthen our approach.

Where needed, we involve external experts to ensure our plans are

robust.

Assessing risk and compliance in our supply chain

Our Responsible Sourcing programme, led by our Supplier Excellence

team, follows a risk-based approach to assessing adherence to our

Partnering with Suppliers standard. Suppliers are risk-assessed against

the following three criteria: location of supplier site, category of

product or service and amount of spend. Suppliers who are assessed as

high risk are required to undertake an independent third-party Sedex

Members Ethical Trade Audit (SMETA) or an equivalent four-pillar

ethical audit. This year we strengthened our approach by increasing

our supplier compliance target from 65% to 85%. We began screening

for human rights with higher-risk potential suppliers before

onboarding. This helps us make more informed decisions on human

rights risks and gives us the chance to assess and mitigate the salient

issues before we contract with a supplier.

We have also mapped our salient risks within our priority supply chains

allowing us to prioritise our actions and drive positive social impact

where it is needed most. Part of this assessment includes identifying

the scale, scope, remediability and likelihood of our salient risks

through different parts of our supply chain. These findings are helping

us to focus our interventions on specific human rights issues in the

supply chain for greater impact. For more information, please refer to

the ESG Reporting Index and Modern Slavery Statement.

Taking action to mitigate human rights risks

Where we identify human rights risks, we take actions to mitigate

them. Some examples of these mitigations are:

Building the capability of our Risk Management Committees and

conducting a mandatory risk deep dive to ensure we are effectively

managing the risk.

Our Global Brand Promoter standard and training establishes principles

and guidelines to protect brand promoters from the risk of sexual

harassment. This training is now available in 17 languages globally. To

date we have trained over 200 agencies and over 18,000 brand

promoters.

Our Child Labour Prevention programme provides training for

smallholder farmers in Africa. This year we trained 282 farmers

in Uganda, who will go on to train up to 10,000 people in

their communities.

Our collaboration with AIM-Progress has resulted in targeted training

on child and forced labour in the United States. This free, open-access

training is available to all our suppliers, labour and service providers.

Our partnership with external parties assesses and addresses the health

impacts of heat stress in sugarcane farming for our rum supply chain

through improved access to sunshades, drinking water, personal

protective equipment and adequate rest schedules.

Our collaboration with AIM-Progress and Oxfam aims to strengthen

supplier grievance mechanisms, improve access to remediation for

workers and build supplier capability to support long-term

improvement.

Assessing the effectiveness of our approach

We measure the effectiveness of our human rights governance through

our internal assurance framework and third-party human rights

assessments. We continue to enhance our risk mitigation plans based

on lessons learned.

We also externally benchmark our progress against best practice

through rankings such as the World Benchmarking Alliance (WBA) Social

Transformation Benchmark. In July 2024, Diageo was ranked joint fifth

out of 2,000 companies assessed.

Engaging our stakeholders

We recognise the importance of listening to and consulting

stakeholders, especially the most vulnerable ones, on issues that affect

them. We do this on an ongoing basis through different mechanisms

including worker interviews, reviewing grievance data and holding

community dialogues within our community investment programmes.

This year we took steps to improve our processes for responding to investor

and customer requests and piloted new ways to collect worker data to

better understand suppliers’ practices and identify potential issues.

This focus on due diligence and disclosure is crucial to us doing

business the right way. It enables us to have transparency in our

engagements with all stakeholders and drive continuous improvements

in our approach. We will continue to focus on this important area,

embedding respect for human rights into everyone’s working day, in

every country and throughout our supply chain.

	Randall Ingber General Counsel and Company Secretary
	Business integrity is at the heart of who we are as a company – it is a competitive advantage and integral to maintain the trust we need to achieve our Growth Ambition.'

40 Diageo Form 20-F 2025

DOING BUSINESS THE RIGHT WAY

continued

Our people  and culture

Our talented and diverse workforce, together with our

people’s passion for our brands and inclusive culture

continues to be a competitive advantage for our

business, enabling our people to perform at their best.

For more details, see the website www.diageo.com.

Highly engaged talent

At Diageo, we are proud to have strong employee engagement levels

across our organisation. Despite macroeconomic uncertainty, our

people continue to express pride and passion for our consumers,

business and brands. In our most recent Your Voice survey, a high

proportion of our people (90%) are proud to work for Diageo, exceeding

the external benchmark(1) by 12 percentage points which is consistent

with our previous survey. Our overall engagement score also remains

high at 83%, which is 7 percentage points higher than the external

benchmark and 2 percentage points higher than fiscal 24.

Benchmarking in the top quartile positions us advantageously as an

employer of choice and supports efforts to attract and retain quality,

diverse talent. There were increasing levels of engagement from

external talent with 23% more career site visits since fiscal 24. To

sustain this position, we recently refreshed our employee value

proposition to strengthen the connection to our purpose, values,

behaviours and culture. Understanding where we can be better is also

important to maintain employee engagement, so this year we have

introduced several new questions to our Your Voice survey in relation

to reward packages and opportunities for growth.

Growing our talent

Growth is a core part of who we are at Diageo; we encourage all

employees to continue to develop through stretching career

opportunities and experiences. Career growth is also critical to

sustaining high employee engagement levels and future-proofing

business performance. In fiscal 25, 79% of our leadership appointments

were internal talent and of this, 21% were international moves and 16%

were cross-functional moves. In the broader workforce, over 5,000

people made career moves. In addition, in our most recent Your Voice

survey, 77% said they feel empowered to seek opportunities to learn

and develop new skills.

We believe that coaching and feedback are critical to unlock career

growth, development and performance. 78% of employees say

their line manager provides feedback and coaching to support their

growth. Our performance enablement programme (‘My Performance

for Growth’) encourages continuous feedback with managers having

regular conversations with their teams, coaching them to define bold

goals, unlock opportunities for growth and build the right skills and

capabilities to drive competitive advantage. In fiscal 25, we also

invested in a new people manager development programme,

‘Impact’, which equips people managers across the globe with the

skills and knowledge needed to inspire, develop and grow high-

performing teams.

To fuel business and individual growth, we prioritise building skills and

capabilities required to win now and in the future. Our groundbreaking

development programme for emerging general managers (GMs),

'Horizons', helps leaders elevate their entrepreneurship, strategic

framing and enterprise-wide thinking. The programme runs for 12

months, combining in-person training, live simulations, project

assignments, coaching and mentoring and is complemented by a tailored

onboarding experience for first-time GMs. Since its launch in October

2023, six participants have been appointed into GM roles and a further

three have been promoted into more senior roles.

Our externally recognised marketing programme Diageo Way of Brand

Building (DWBB) has been updated in fiscal 25 to integrate the very

latest in consumer trends, marketing science and technology including

AI. We piloted a five-day training programme in North America and

South, West and Central Africa, and launched an online DWBB training

hub for all employees with 14 brand-building skills modules. ‘How we

Build Brands’ has also been integrated into all employee onboarding

with over 900 completions since December 2024. Within commercial,

we launched the 'Igniting Commercial Excellence' programme which

provides specialised training to our market teams. Finally, we offer a

series of trainings to build capability in digital skills including data and

digital transformation and omnichannel best practices for marketing.

Continuing to evolve our culture

n our recent Your Voice survey, Diageo employees characterised our

culture as engaging, ambitious and collaborative. Our purpose, along

with the pride and passion for our brands, forms a fundamental part of

this vibrant culture. Embedding a culture of speed and agility remains

pivotal to our ability to achieve our Growth Ambition and ensure long-

term success. In fiscal 25, we have kept up the momentum, by

reinforcing our dial-up behaviours ‘Be Externally Curious’, ‘Collaborate

Efficiently’, ‘Experiment and Learn’ and ‘Act Decisively’. Our over 550

culture change champions represent all levels and parts of the business

and play a pivotal role in reinforcing behaviours, sharing and

embracing best practice across Diageo.

In fiscal 25, we concluded the expansion of ‘Celebrate’, our global

recognition platform. Across the business, employees have delighted in the

opportunity to spot behaviours in real time and recognise colleagues. This

fiscal the ‘Celebrate’ platform has received more than 140,000

nominations of colleagues demonstrating our values and ‘dial-up

behaviours’; this amounts to one recognition being received every four

minutes. We also launched the inaugural CEO Celebrate Awards to

recognise the remarkable impact teams had on driving growth and

performance through our cultural shifts. In July 2025, Diageo Ireland won

‘Market of the Year’ award for exceptional performance in fiscal 24,

demonstrating strong growth, whilst also driving high levels of employee

engagement and fostering a culture of speed and agility.

In the first half of the fiscal, we ran a Pulse Check to measure progress

against the dial-up behaviours. Results showed that 84% of employees felt

encouraged to practise the dial-up behaviours and 75% felt supported in

applying them.

We are already seeing the impact of our cultural transformation on

business performance with our dial-up behaviours enabling us to disrupt

our innovation-to-launch process times, enter white spaces in Brazil by

adapting our route to consumer approach and establish and grow a new

standalone market in the Middle East and North Africa (MENA) with the

strategic vision and operating model established in under three months.

(1) Based on a blend of Ipsos Karian and Box, Qualtrics benchmark data. The Global

Manufacturing benchmark includes organisations with global coverage that

operate within FMCG and other industry sectors.

41 Diageo Form 20-F 2025

Barry O'Sullivan (MD Diageo Ireland in July 2024) winning 'Market of the Year'

award as part of our CEO Celebrate Awards

Culture change is a multi-year journey and there is more to do. Leaders’

role-modelling the dial-up behaviours consistently is key to success and

driving sustainable change. This is a key focus of our culture change

plan, and we are working closely with our leaders to reinforce this.

Alongside our dial-up behaviours, we continue to cultivate a culture of

integrity, accountability and operational excellence, ensuring we

continue to strengthen our focus on execution.

Enabling our people to thrive

Employee wellbeing is a key driver of sustainable performance. We

believe that people are at their best, both at work and at home, when

they are physically and mentally thriving, emotionally balanced,

financially secure and socially connected. Our Global Health, Safety

and Wellbeing Policy integrates these four dimensions into our daily

culture, by providing tools and resources on topics like healthy habits,

menopause and sleep. We also help employees connect to our purpose

as a source of energy, with leaders sharing examples of how our

consumers, brands, people, sustainability and society fuel their

motivation and drive.

We recognise the role line managers play in creating an environment

where people can prioritise their wellbeing. Through our new 'Impact'

people manager development programme, our line managers are now

trained on how to build inclusive teams and create an environment to

perform by enhancing their own and their team's energy and resilience.

Our wellbeing champions are key to embedding wellbeing into our

culture. Our headquarters 'Wellbeing Day' is an example of how

employees take ownership of our four wellbeing dimensions in their

local communities. Many markets have also led employee physical

wellness challenges, such as Türkiye's partnership with Heltia and

Ireland’s Wellbeing Warriors, an employee-led resource group,

establishing bespoke physical and social wellbeing initiatives whilst

also creating awareness of global events.

In fiscal 25, we were pleased to launch the One World all-employee

global share plan across over 50 countries and during the year all

17,000 eligible employees were awarded £500 of Free Shares, creating

15,000 new Diageo employee shareholders.

In February 2025, we launched 'nudge' in the United Kingdom, South

Africa and India to support financial wellbeing through improved

literacy, security and confidence. The interactive platform offers

clear, personal financial guidance for all life stages. So far, 72% of

eligible employees have used it and shared positive feedback. In terms

of mental wellbeing, our Mental Health Awareness eLearning helps to

normalise mental health discussions, complemented by our celebration

of World Mental Health Day across the organisation. Our Employee

Assistance Programme offers employees free, confidential advice and

counselling around the clock on personal, emotional and work-life

issues. Lastly, Diageo’s Flex philosophy continues to offer employees

opportunities to balance their work and life activities.

Average number of employees by region and gender(1)

Region(2)	Men	%	Women	%	Not declared( 3)	%	Total
North America	1,924	60%	1,307	40%	12	—	3,243
Europe	5,979	56%	4,613	44%	16	—	10,608
Asia Pacific	5,638	65%	2,995	35%	1	—	8,634
Latin America and Caribbean	2,689	61%	1,719	39%	—	—	4,408
Africa	1,823	61%	1,143	39%	1	—	2,967
Diageo (total)	18,053	61%	11,777	39%	30	—	29,860

Average number of employees by role and gender(1)

Role	Men	%	Women	%	Not declared(3 )	%	Total
Executive(4)	8	62%	5	38%	—	—	13
Senior manager(5)	335	57%	253	43%	—	—	588
Line manager(6)	2,797	64%	1,602	36%	6	—	4,405
Supervised employee(7)	14,913	60%	9,917	40%	24	—	24,854
Diageo (total)	18,053	61%	11,777	39%	30	—	29,860

(1)This data has been compiled as a monthly average based on the proportion of employees who

have identified their gender as male, female or undisclosed. In some cases assumptions have

been applied where data is not available.

(2)Employees have been allocated to the region where they live.

(3)This data represents the proportion of employees who have chosen not to disclose their

gender as male or female.

(4)The number of executive positions have been calculated based on data at 30 June 2025.

(5)Top leadership positions in Diageo, excluding Executive Committee.

(6)All Diageo employees (excluding senior managers and Executive Committee) with one or

more direct reports.

(7)All Diageo employees (excluding senior managers and Executive Committee) who have no

direct reports.

	Louise Prashad Chief HR Officer
	I am thankful to our 29,000+ employees who collectively foster a culture of pride in our brands and our purpose of celebrating life every day, everywhere. Their ownership for business performance working together with customers, partners and colleagues helps us to attract and retain the very best talent for Diageo.'

42 Diageo Form 20-F 2025

DOING BUSINESS THE RIGHT WAY

continued

Health and safety

We prioritise the health and safety of our people

throughout our value chain to ensure everyone is safe

when working, every day, everywhere.

3-year trend: Lost Time Accident Frequency Rate (LTAFR)

For more details, see the Non-Financial Reporting Boundaries and Methodologies found on our website www.diageo.com.

Embedding a culture of health and safety

Safety is a collective responsibility and an essential aspect of every role.

By empowering and engaging our employees in safety practices, we

reinforce our commitment to the principle that no level of accidents is

acceptable.

Our approach to health and safety is built upon our Global Health,

Safety and Wellbeing Policy and our Global Risk Management

Standards. We perform risk assessments, leveraging compliance

systems, technology, and training to develop and implement innovative

working methods that strive for continuous safety improvement.

We actively promote employee engagement in accident investigations

and improvement initiatives, ensuring they receive the latest health

and safety training to perform their daily tasks safely. Additionally, we

run company-wide communication campaigns and in fiscal 25 we used

data to inform our monthly safety campaigns highlighting specific

hazards, such as fire safety, working at heights and safe driving.

The 'Safer Together' strategy incorporates both a strong safety culture

and a comprehensive technology roadmap. Designed to prevent severe,

fatal and process safety incidents, the overall approach also aims to

enhance health and safety standards across the organisation.

Roadmaps support the integration of an improved safety culture at all

locations. The technology roadmap features digital solutions,

automation, forklift truck advancements including camera technology,

manual handling wearable kits and artificial intelligence, each

contributing to better health and safety performance. During fiscal 25,

over $40 million was invested in shuttle warehousing, where casks are

put away on pallets by an automatic shuttle rather than manual

handling. An additional investment is expected next year to complete

the shuttle warehouse complex, helping improve safety and boost

productivity. These strategies and roadmaps are also extended to

contractors and third-party providers.

We recognise that process safety events (1) pose significant risks to the

health and safety of employees, communities and the environment, as

well as potential damage to property, reputation and business

continuity. To manage these risks, our comprehensive process safety

strategy has been reviewed with the objective to ensure regulatory

compliance. We drive continuous improvement through incident

analysis and performance monitoring to foster a strong safety culture

across the organisation. Integral to this strategy is Diageo’s risk-based

process safety framework, consisting of 20 elements designed to

proactively identify, assess and mitigate hazards that could cause

major incidents such as fires, explosions or toxic releases. In fiscal 26,

the focus will be monitoring early warning signs such as equipment

anomalies, procedural deviations and near misses to enable proactive

risk management. Efforts will also continue to build process safety

capabilities. Targeted audits will be performed at key sites to verify

compliance, address gaps and enhance overall safety performance.

Empowering responsibility:

Fostering a safe work environment

Leaders across the organisation are responsible for cascading and

implementing health and safety policies and procedures among their

direct reports and third parties. We expect all employees to take

responsibility for their health and safety and those around them, by

acting in accordance with our Code of Business Conduct. We utilise a

variety of tools to identify health and safety risks as per our Global

Health, Safety and Wellbeing Policy. Each location performs hazard

identification and risk assessments which identify and address unsafe

conditions. We also have a safe observation programme across all

locations to identify unsafe behaviours, recognise best practices and to

report work-related hazards. All employees and third parties are

encouraged to remove themselves from work situations they believe

could cause injury or ill health. Hazards are logged on local action

planning systems and tracked for closure.

To track the effectiveness of our approach, all our locations regularly

monitor and review health and safety performance. We report the

results monthly to the Global Supply Chain and Procurement leadership

team, to the Executive Committee at quarterly meetings and to the

Board twice yearly.

Our performance

We report on lost time accident frequency rate (LTAFR). This year, our

rate was 0.82 (fiscal 24: 1.06) lost time accidents (LTAs) per 1,000 full-

time employees (including directly supervised contractors). Over the

last three fiscal years LTAFR has shown year-to-year variability with a

decrease in fiscal 25 following an increase in fiscal 24 reflecting the

dynamic nature of our risk environment and ongoing efforts to enhance

workplace safety. Our LTAFR decreased against last fiscal, driven by

reductions in accidents across a number of markets but most

significantly in the scotch category and North America.

Our total recordable accident frequency rate (TRAFR) which records

work-related injuries that need more than first aid treatment increased

during this fiscal. In absolute numbers, our total accidents reduced (fiscal

25: 89 accidents, fiscal 24: 90 accidents) however the average total

headcount used as the denominator in the calculation reduced therefore

impacting the rate. We investigate each recordable accident to establish

the root cause, contributing factors and insights. We share the key

learnings across the organisation aiming to prevent recurrences. For more

information, please refer to our ESG Reporting Index.

(1) Industrial incidents involving an unintended release or loss of control of hazardous

materials or energy from a process system.

43 Diageo Form 20-F 2025

Continuous improvement initiatives

Our workplaces are constantly evolving with new technologies,

processes and equipment. Continuous improvement ensures that health

and safety measures keep pace with these changes, addressing

emerging hazards effectively. In fiscal 25, we introduced and

continued several important programmes, as included below. We will

continue to advance these programmes as part of our culture and

technology roadmaps in fiscal 26.

Culture assessment

During fiscal 25, we launched our first ever global governance

baseline culture survey to our supply organisation. We used an

independent provider to complete a culture assessment across our

most material areas, including health and safety, food safety and

quality. With more than 5,000 responses, the overall health and safety

maturity values were 86% for supply sites and 84% for technical

centres. The culture assessment focused on four key themes: people,

process, purpose and proactivity. The assessment demonstrated a

strong level of maturity across all key themes as well as a favourable

comparison against industry benchmarking.

Behavioural Standard

Since fiscal 24, the Behaviour Standard workshops, aimed at enhancing

safety culture, have been implemented across 19 individual sites. In

the current fiscal year, the programme has been further expanded to

include manufacturing facilities in Mexico, Türkiye and Australia. Each

workshop produced a comprehensive action plan. All participating sites

have demonstrated substantial progress in executing and closing out

the action plans, thereby contributing to the development of a more

robust and sustainable safety culture.

Monthly health and safety campaigns

Based on insights from fiscal 24 as well as performance through fiscal

25, our communication campaigns focused on the themes of 'Strive for

Zero', 'Life Saving Rules', 'Fire Safety' and 'Process Safety'. These

campaigns were introduced to raise awareness of increasing incident

trends and areas where there may be the potential for a life-

threatening or life-altering injury.

Over and above the monthly campaigns, we launched a refocused

safety campaign to highlight the need for locations to remind their

employees on the basic principles of ‘eyes and mind on task’.

Safer Driver Programme

Diageo's commitment to improving workplace safety standards includes

a driver training programme implemented to promote safe driving

behaviours across five key pillars (risk, speed, distraction, fatigue, eco)

among commercial employees who drive for business purposes. It also

features short, customised e-learning modules that are tailored to

individual driving behaviours, helping to educate drivers on safe driving

practices. During fiscal 25, the programme has been rolled out to 1,700

drivers across multiple markets. This brings the total rollout across

fiscal 24 and 25 to approximately 3,500 drivers. The aim of the

programme is to reduce accidents and enhance the overall safety of

company drivers. The programme is expected to lower insurance and

maintenance costs, but also boost driver morale and improve

operational efficiency.

World Health and Safety Day

We celebrated World Health and Safety Day as part of a wider global

health and safety awareness week. The topics included in the campaign

focused on revolutionising health and safety through AI and digital

technologies, launch of a process safety senior leadership observation

tour and a high-level overview of the recent culture assessment.

Beyond our own operations we also extend our health and safety

standards to strategic suppliers, working closely with them to improve

safety practices that promote safer working within their workforces.

	Ewan Andrew President, Global Supply and Procurement & Chief Sustainability Officer
	Our health and safety results for this year demonstrate a well-embedded strategy to prevent injury, but we are never complacent. Our continuous improvement programmes and introduction of technology solutions continue to be top priorities to ensure the health and safety of all.'

44 Diageo Form 20-F 2025

PROMOTE POSITIVE DRINKING

Promote positive drinking

We want to change the way people drink – for the

better, by engaging, educating and empowering

consumers to make informed choices about

drinking.

Key Targets

Tackling underage drinking through SMASHED(1)
Year	People educate d
Target by 2030 Scale up our SMASHED partnership and educate 10 million young people, parents and teachers on the dangers of underage drinking	10m
2025 cumulative progress	8.2m
2024 cumulative progress(2)	6.2m
2025 Performance Number of people educated on the dangers of underage drinking through a Diageo-supported education programme in fiscal 25	2.0m

Changing attitudes to drink driving(3)
Year	People educate d
Target by 2030 Through our programmes, deliver five million educational experiences that promote changes in attitude to drink driving.	5m
2025 cumulative progress	3.8m
2024 cumulative progress	2.2m
2025 Performance Number of educational experiences delivered for people to change their attitude to drink driving in fiscal 25	1.6m

(1) Baseline year fiscal 18.

(2) Prior year cumulative figures have been restated due to a change in rounding methodology.

(3) Baseline year fiscal 20.

For more details, see the website www.diageo.com.

Our brands have been part of people’s celebrations for generations; we

make them with pride, and they are made to be enjoyed responsibly.

Our Positive Drinking approach includes three pillars addressing

different types of harmful use and promotes responsible use of alcohol:

Education to tackle harmful drinking with a focus on underage

drinking, drink driving and binge drinking.

Promoting moderation through aspiration and choice by

encouraging moderation through our brands.

Advocating for alcohol policies that support consumer choice,

deepen understanding of alcohol and tackle illicit production

and consumption.

We apply creative, innovative solutions to tackle the harmful use of alcohol

globally. Our markets use global assets but also use local partnerships and

innovation to ensure cultural relevance.

Our people are champions for promoting positive drinking. This year,

we launched ‘The Measure’, a campaign designed to provide more

information on how our employees can advocate for moderation.

Through activations with brand ambassadors including Gary Neville,

English football pundit, and Ben Branson, founder of Seedlip, we are

empowering our people to speak candidly with family and friends

about the importance of moderation. 93% of our employees stated in

our employee engagement survey that they feel confident to talk about

positive drinking in both professional and personal situations.

Education to tackle harmful drinking

Underage drinking

We believe it is never acceptable for anyone underage to consume

alcohol. That is why we have run campaigns and education programmes

to combat underage drinking for many years.

SMASHED is a programme that educates young people aged 10-17 on the

dangers of underage drinking. It was developed by Collingwood Learning,

and we have been proud to sponsor it for the past 16 years. This year,

the programme was recognised as the gold winner in the Good Awards

for Educational Excellence (large organisations category).

SMASHED began in 2005 as a live theatre production and has since been

enhanced to enable online learning. To make the programme as

successful as possible, the performance can be tailored to specific

countries using local actors and cultural references.

We continued to deliver a very strong performance on the programme

this year, with delivery partner collaborations across Latin America and

Africa, driving participation. In fiscal 25, a projected 1.6m people have

confirmed changed attitudes to the dangers of underage drinking based

on our sampling of participant surveys.

Drink driving

We have long championed awareness on the risks of drink driving,

including collaborating with law enforcement and local authorities. In

2021, we launched Wrong Side of the Road (WSOTR) digital learning

resource with the United Nations Institute for Training and Research

(UNITAR), aimed at raising awareness about the consequences of drink

driving. WSOTR is available in digital and classroom formats and is now

in 26 different modules, each with distinct video content.

This year we scaled WSOTR in China, delivering increased participation

in tier one cities, through digital news, graphics, podcast, Weibo and

on-site activations.

In addition, we continue to innovate to raise awareness and drive

meaningful behaviour change. In partnership with Mothers Against

Drunk Driving (MADD), the National Football League (NFL) and Uber, we

launched a comprehensive campaign in the United States 'Take a

minute. Make a plan. Never Drive Impaired'. Running from December 2024

through February 2025, the campaign spanned TV, streaming, radio, out-of-

home, in-game integrations, in-bar messaging, digital and social media.

Results show that the campaign reached over 100 million people with

more than one million Uber rides redeemed using discount codes in

December alone.

45 Diageo Form 20-F 2025

Informed choices about drinking

Our DRINKiQ web-based platform gives everyone the facts, tools and

support to help make informed choices about their relationship with

alcohol. DRINKiQ is available in all our strategic markets, with regular

campaigns to promote usage of the site. This year, we invested in

improving the user interface and functionality of the website and

updating content. We also launched DRINKiQ China linked directly from

the WeChat app, including new and improved educational content

reflecting local moderation trends.

Promoting moderation through aspiration and

choice

We know that making moderation feel aspirational and therefore a

popular choice is critical in driving positive drinking attitudes and

behaviours. We also know that we must couple aspiration with choice,

delivering a wide range of products and strategies that empower

consumers to moderate effectively. Alongside this, we invest each year

in training which helps our marketers understand how to best promote

moderation through our brands and innovations.

We launched several new campaigns this year which leveraged strong

consumer insights and delivered against our goal of making moderation

more aspirational including:

-Johnnie Walker in Brazil 'Strong are the women': A powerful and

engaging campaign designed to encourage moderation through

education and empowering women. The campaign reached 38 million

consumers, with 91% of consumers agreeing that the campaign made

them 'feel good about drinking moderately'.

-DRINKiQ and Men's Shed, Great Britain: Through our newly formed

partnership with Men’s Shed UK, we targeted older men with a

campaign to foster social connection, improve wellbeing and promote

moderation, highlighting DRINKiQ as a resource. Supported by former

boxer Tony Bellew, the campaign reached over 27 million consumers

and provoked a positive response amongst consumers, with 84%

agreeing that it made them 'feel good about drinking moderately'.

We also continue to expand delivery of choice to consumers through our

non-alcoholic portfolio, with the total number of non-alcoholic options

increasing from three in fiscal 20 to 20 in fiscal 25. We now have a non-

alcoholic choice available in 15 markets (63% of our strategic markets).

Advocating improved laws and industry standards

We believe that industry-wide standards and sensible regulation create

an important framework to encourage responsible drinking. We support

policies that are evidence-based, account for drinking patterns, target

at-risk groups, treat all forms of alcohol equally and involve all

stakeholders. We publicly advocate that governments adopt effective

new regulation based on evidence including blood-alcohol volume

driving limits, responsible digital marketing and legal purchase age

laws. In addition, we advocate for effective industry-wide standards in

responsible marketing and consumer information. We support effective

programmes to tackle alcohol misuse.

The last 10 years have seen declines in binge drinking, drinking and

driving and underage drinking in many countries. As members of IARD

(International Alliance for Responsible Drinking) we are committed to

building on these positive trends and actively support international

goals to reduce harmful drinking. This includes delivering on the

recommendations presented to the sector in the United Nations 2018

Political Declaration on non-communicable diseases, in particular by

taking concrete steps towards eliminating the marketing, advertising,

and sale of alcohol products to minors.

Marketing in a responsible way

The Diageo Marketing Code (DMC) sets our principles for responsible

marketing, and it represents a cornerstone of the way we do business.

The DMC includes our commitment to encouraging only responsible and

moderate drinking and never targeting underage audiences. We are

proud to have a proven track record of compliance, which is

underpinned by appropriate checks in every market we operate in.

This year we have tested and deployed an AI-based assistant to support

human DMC reviews, which has reduced the time needed to review

content, whilst keeping the highest standard of compliance. Now

deployed to a large group of our marketers, the tool can review imagery,

video and text against DMC requirements. We continue to train and test

the system with new creative assets, and as the accuracy improves,

more users will be adopting the technology for AI assisted reviews.

We regularly review reporting from advertising monitoring and industry

bodies across key markets, for breaches of self-regulatory alcohol

marketing codes. No complaints relating to Diageo marketing were

upheld by key industry bodies this fiscal year.

Complaints upheld by key industry bodies that report publicly are

presented below.

Incidents of non-compliance concerning marketing communications – fiscal 25(1)
Country	Body	Complaints upheld against alcohol advertisers	Complaints about Diageo brands upheld
United States	Distilled Spirits Council of the United States	—	—
Australia	ABAC Scheme	42	—
United Kingdom	Advertising Standards Authority	5	—
	Portman Group	6	—
Republic of Ireland	Advertising Standards Authority for Ireland	2	—

(1) From 1 July 2024 to 5 May 2025.

	Daniel Mobley Global Corporate Relations Director
	We have a long and proud record of promoting positive drinking. Every year we educate millions of consumers to drink in moderation through our global brands and DRINKiQ platform. Our programmes and partnerships that tackle underage drinking, drink driving and binge drinking reach millions of people each year, changing attitudes towards harmful drinking for the better.'

46 Diageo Form 20-F 2025

pioneering grain to glass

sustainability

Pioneering grain to

glass sustainability

Our business depends on natural resources. We are

directly affected by changes in climate and the

related challenges of nature loss, particularly

freshwater. We continue to address the risks and

opportunities climate change and nature loss pose to

our business through focused actions to mitigate our

most material risks.

For more details, see the website www.diageo.com.

Introduction

Our exposure to climate risk is intensifying, due to extreme weather

events and rising temperatures. Although our analysis indicates that

our business is resilient in the short- and medium-term, we continue to

monitor what is needed to sustain this resilience, both for our

operations and our communities in which we operate. We are

committed to acting responsibly to mitigate our contribution to global

warming and adapt to changing conditions, to support our licence to

operate. We respond to climate change and biodiversity, mitigating the

risks associated with changing environmental and biodiversity factors

through our grain-to-glass sustainability strategy.

Our ‘Spirit of Progress’ targets reflect our most material ESG issues

and align to the UN Sustainable Development Goals. We are signatories

to the UN's 'Race to Zero' and 'Race to Resilience' campaigns reflecting

our commitment to tackle climate change. We are focusing our work in

the areas most at risk in our business across water, agriculture and

communities. 

We are proud of our accomplishments to date, including reaching

several of our goals earlier than planned. However, we have identified

several critical external factors beyond our control that influence the

timing and pace of our efforts. Some of these challenges include wider

energy infrastructure availability, appropriate policy frameworks,

consumer acceptance, financing solutions and cost burdens which need

to be shared. We have also faced challenges reaching our packaging

goals. For example, increasing recycled content in our packaging is

hindered by external factors such as cullet availability.

To tackle these challenges, we are increasing the number and depth of

our partnerships to leverage shared resources and aligned interests,

while advocating for transformative change. As we meet goals and

experience challenges, we learn and adapt. We have revised our

aspirations across several targets this year, accelerating our ambition

across water and regenerative agriculture while reconsidering the scale

and pace of decarbonisation and packaging optimisation.

Our updated decarbonisation targets reinforce our commitment to

tackling climate change. These science-based targets, validated

against the Paris-aligned 1.5°C reduction pathway, encompass both

near- and long-term objectives across our value chain. Our revised

targets are shown on page 51 and 53-55. Performance against

supporting targets, including some of our packaging and electricity

targets, have been separately reported in the ESG Reporting Index. 

Reporting

We have used the guidance of the Task Force on Climate-related Financial

Disclosures (TCFD) framework for reporting. Increasingly we are

incorporating nature risks and dependencies into our strategic planning. We

continue to identify and quantify our material impacts and dependencies,

following the guidance of the Taskforce on Nature-related Financial

Disclosures (TNFD)'s LEAP (Locate, Evaluate, Assess, Prepare) framework.

Governance

Given the importance of climate and nature risks, we have governance

processes in place to ensure that we factor the risks into our business

operations and planning processes. To supplement our ‘Spirit of

Progress‘ governance (summarised on page 37), our sustainability

performance is integrated into our operational and strategic review

processes. We track water efficiency and greenhouse gas reduction

projects and hold quarterly strategic business reviews focusing on

multi-year plans. Significant risks identified are escalated to enterprise

risk management forums at group level. We oversee climate and nature

risk through these governance structures and processes:

Executive sponsorship is shared jointly between the President, Global

Supply & Procurement and Chief Sustainability Officer and the Global

Corporate Relations Director.

They are supported by our cross-functional Climate, Water and Nature

Risk Steering Group.

The Climate, Water and Nature Risk Steering Group provides regular

updates to the executive sponsors and the Board.

The Board retains ultimate responsibility for the oversight of climate

related risks and opportunities, including monitoring progress against

climate-related targets.

Any impacts, including actual and potential, on our consolidated

financial statements from climate and nature risks and

performance against non-financial metrics are shared with the

Audit Committee annually.

Board oversight

Executive Committee ownership

President of Global Supply

& Procurement and Chief

Sustainability Officer

Global Corporate

Relations Director

Audit Committee

Executive sponsors

Cross-functional Climate, Water and Nature Risk Steering Group

Finance

Corporate

Relations

Marketing

Working groups assigned to address key risks

and opportunities identified

Supply &

Procurement

Legal

Risk

Strategy

47 Diageo Form 20-F 2025

Risk Management

Identifying climate risks and opportunities

We divide climate risk into physical and transition risks. Physical risks

include chronic changes, like sea level rises, temperature changes and

acute events like floods, droughts and heatwaves. Transition risks arise

from actions to mitigate climate change, such as policy and regulatory

shifts; technology evolution or consumer behaviour fluctuations. Both

categories of risk are already occurring and are likely to increase. As

temperatures continue to rise globally, we continue to assess and prepare

for emerging physical and transition risks.

We partner with climate resilience and nature experts to identify and

assess how generally recognised climate and nature risks apply to

our business.

Climate change resilience

Our experience in managing the impact of normal variations in climatic

conditions, water availability and agricultural yields has made us more

resilient and adaptable. We have embedded careful planning in our

supply chain and procurement organisation over many years. We

manage water in a way that makes our operations more resilient and

helps our local communities and agricultural sourcing areas to adapt,

with a specific focus on water-stressed areas. We work with peers to

drive enhanced technological practices at scale, which optimise crop

management and seed quality. We also collaborate on the

development of novel high-yielding, drought and temperature-resilient

crop varieties. We recognise that thriving natural ecosystems are

essential for long-term agricultural productivity and climate resilience,

and we aim to protect and restore nature across our sourcing regions.

Since first referencing it in 2010, we have integrated climate risk into our

enterprise risk management processes, within our principal risk factors.

This is now an integral part of our strategic and business continuity

planning. As we continue to build and strengthen our adaptation plans,

we see our work on water, agriculture and communities as particularly

important in increasing our climate resilience.

Identifying and assessing our physical risks

For the last four years, we have worked with climate resilience experts

to analyse all of our direct operations sites and key third-party

suppliers' sites to assess the physical risks that we are exposed to and

how they may develop under various scenarios. The analysis included

some sites that are planned or under construction, to ensure we

understand their exposure and prepare their resilience before

commissioning the site. The scenario analysis and phasing of the risk

assessments are outlined in the Non-Financial Reporting Boundaries

and Methodologies, available on our website.

Following each successive year's analysis, the total global physical risk

footprint was refreshed.

The physical risk assessments measured the exposure and vulnerability

of the activities at the sites in scope to 19 climate-related hazards. In

addition, we reviewed the vulnerability of the main agricultural

materials and our key distribution routes to climate change. We then

considered how the climate-related hazards and our site vulnerabilities

would materialise under two different future warming scenarios and

over two timeframes:

Intergovernmental Panel on Climate Change (IPCC) scenario RCP

(Representative Concentration Pathway) 4.5 – medium warming of 2-3°C;

IPCC scenario RCP8.5 – severe warming of 4-5°C; and

•with both scenarios evaluated for the periods up to 2030 and up

to 2050.

These scenarios were chosen to represent a 'worst case' (RCP8.5) and a

'medium case' (RCP4.5) under which we assess our resilience.

For our own sites and many of our third-party operators producing

beverages on our behalf, we analysed climate-related risks which are

more likely to materialise. For those that are most strategically

important or at greatest risk, we carried out more detailed

assessments. At each location, we considered a combination of the

different production activities (e.g. distilling and packaging) as well as

parts of the supportive processes that might be affected (e.g.

infrastructure, water supply and energy sources) and the 19 physical

climate-related risks that might occur.

We also analysed our key suppliers' factories and warehouses; for example

those handling our most critical or specialised ingredients and components,

key agricultural commodities and our most critical distribution routes, to

identify which might be exposed to physical risks in the future.

Water is vital to our operations and the raw materials we use when

creating our products. We give great focus to understanding water-

related risks to inform our mitigation strategy. In addition to our

physical climate risk assessments to analyse the risks from water

availability, water temperature, water quality and flooding, we also

conduct water stress analyses at our sites every two years.

We undertake this work using site surveys and World Resources

Institute (WRI) Aqueduct data. We also complete water source

vulnerability assessments (SVAs) at our sites located in water-stressed

areas to further our understanding of the risks and how to address

them. This work provides comprehensive insights into how our risk

profile may vary with climate change, such as the degree of

vulnerability to water stress within our operations and supply chain.

We can then use these insights to help us act where we believe it is

most needed, whether that is improving our water efficiency,

increasing our replenishment commitments or prioritising climate

adaptation planning. In fiscal 25, we updated our water risk

assessments for the purposes of informing our future water strategy,

and carried out SVAs with our external partner on an

additional six sites. For more information, please see page 31 of our

ESG Reporting Index.

Risk assessment results – our most important

physical risks

Our assessment confirmed three key points:

1.Water stress, including drought, is our most significant climate-

related physical risk in terms of prevalence, trajectory and potential

financial impact. It affects our ability to produce our products,

access to agricultural ingredients that we need and, ultimately, our

licence to operate.

2.Agricultural raw materials are at risk from climate change, and we

see that risk increasing under the scenarios and timeframes we

analysed. Our models suggest that the costs of most commodities are

likely to increase because of climate change, although estimates of

the precise impact vary significantly depending on the model used,

underscoring the difficulty of such projections. These factors

potentially affect our own operations and those of some of our

suppliers.

3.Acute weather events, including floods, winds, hurricanes, storms,

heatwaves and wildfires are projected to increase and to cause

interruption to operations, although their impact is unlikely to be as

significant as that of the risks related to water and agricultural

materials.

For more details on our scenario analysis approach, see the Non- Financial Reporting Boundaries and Methodologies on our website www.diageo.com.

48 Diageo Form 20-F 2025

PIONEERING GRAIN TO GLASS SUSTAINABILITY continued

Quantitative impact of physical risk determined by

scenario analysis

In fiscal 24, we collaborated with climate resilience experts to develop

and implement an automated scenario analysis tool to inform our

climate adaptation strategy. The tool allows us to perform further

scenario analyses and test numerous sensitivities to defined variables.

For example, we can analyse the sensitivity to climate risks of certain

categories or markets and estimate the impact of the adaptation

measures that we have implemented. This marked a pivotal

advancement in integrating climate risk into our strategic planning

processes. This year, we updated our modelling data to reflect our

latest volumes and growth estimates, and remodelled the chronic risk

of water availability, the acute risk of drought, commodity price

increases due to climate change and one-off climate-related events.

The precise risks and opportunities that were modelled in our scenario

analysis are outlined in the Non-Financial Reporting Boundaries and

Methodologies, pages 4-7.

Water stress, including drought

Under the warming scenarios we modelled, nearly a quarter of our

sales will be exposed to increased water stress in both scenarios and

timeframes. Under these warming scenarios, the absolute number of

sites may not increase significantly, but under both timeframes, those

sites affected may suffer even greater shortages of water, which may

impact our operations and the health and wellbeing of employees at

those sites, as well as local communities.

Analysing the financial impact of drought presents particular challenges

due to numerous factors, such as the probability of occurrence, duration

of operational suspension and effectiveness of adaptation or contingency

measures. We have modelled what we are currently able to through

scenario analysis, considered our own assessment of vulnerability and

applied highly conservative assumptions (e.g. downtime in all sites due to

drought). We have concluded that, by 2030, we do not anticipate drought

to have a significant impact on our operations (including key third-party

operations) or on our financial position. Beyond 2030, it is more difficult

to analyse, given the increased uncertainties inherent in modelling over

an extended timeframe. Our models show that adaptation actions are

needed, particularly in the period between 2030 and 2050, in order to

prevent significant interruption to our operations and supply chain. If no

action is taken, it may potentially result in lost sales. In our strategy

section below, we outline the interventions we are currently

implementing to future-proof our business against drought.

Agricultural raw materials

Agricultural commodity price increases due to climate change are more

difficult to estimate, with our models producing highly varied

estimates. Climate risk is likely to result in a projected price increase

for the majority of our commodities. Our scenario analysis helps us

build commodity price risk into our raw material procurement

strategies, particularly for crops with unique provenance (e.g. agave

and vanilla) or high sensitivity to growing conditions (e.g. hops). Our

modelling suggests the biggest risks of price variability in 2030 and

again in 2050 are likely to impact agave, sorghum, rice, wheat, dairy

and hops. There are considerable differences between models, but the

impacts in both 2030 and 2050 may be significant.

Acute weather events

Acute weather events, such as flooding and storms, are the next most

likely physical risks to affect our financial performance, given the risk

of damage to our sites and disruption to our supply of agricultural

ingredients. Although the direct risk to our sites from acute physical

events will increase, our scale, global supply footprint and capabilities

in resilience management mean we are well-positioned to ensure

flooding and storms do not interrupt our overall ability to serve our

customers or have a significant financial impact on a global scale.

Heatwaves, wildfires and landslides are also identified as acute

physical risks. Their potential financial impact is not modelled in our

scenario analysis but adaptations to these risks are planned where they

are projected to increase.

Identifying and assessing our transition risks and opportunities

We have performed additional scenario analysis to estimate the financial

impact of transition risks and opportunities under a Paris-aligned

emissions scenario (RCP2.6). The analysis provided us with a better

understanding of our risks and opportunities associated with

transitioning to a low-carbon economy. Through this analysis, we have

refined our financial estimate and gained further clarity on how to

respond.

We identified the risks with the most potential impact by looking at

our agricultural inputs, production and packaging, distribution and

sales channels. We were able to determine the most important

transition risks and opportunities to monitor, including:

•Decarbonisation costs: Changes to our supply chain and production

costs, including carbon taxes and related changes to input costs (risk

and opportunity).

•Consumer behaviour: Changes in consumer behaviour to favour more

sustainable options, e.g. choosing circular products or locally

produced brands (risk and opportunity).

•Regulatory changes: Shifts in public policies, e.g. restrictions on

packaging, water use, agricultural materials or land that affect our

ability to make our products (risk).

•Technology changes: Adopting low-carbon production of our products

and packaging, and the associated risk of not doing this fast enough

(risk and opportunity).

Of the risks and opportunities outlined above, the greatest impacts are

likely to arise from consumer behaviour and decarbonisation costs. The

table on page 49 summarises the physical and transition risks and

opportunities we consider the most important.

Quantitative impact of transition risks and

opportunities

Transitioning to a low-carbon economy presents both risks to and

opportunities for our business. Through our scenario analysis, we have

been able to estimate the impact on our operations and financial

condition to 2030, concluding that it is unlikely to be significant over

that period, even assuming that we bear changes in production costs.

Packaging is the key transition risk and opportunity

We identified that the key driver of transition risk to 2050 is our use of

glass which could contribute to an overall production cost increase.

We noted that lower transport and energy costs would partially

mitigate this impact. Extending the analysis to 2050 is subject to many

variables and ambiguities and, therefore, substantial uncertainty.

However, it allows us to estimate what a 'worst-case scenario' may look

like, based on our best available modelling of cost trajectories.

Our modelling has allowed us to estimate the impact on our operations

and the financial condition, after considering some of the possible

mitigating actions we plan to take, which can include pricing,

improvement in energy use, sourcing and using lighter weight

packaging, reducing the carbon intensity of glass production and using

returnable or reusable packaging.

The results of the scenario analysis of both physical and transition risks

are reflected in our assessment of viability and impairment of tangible

and intangible assets (see pages 72-73 and 154).

49 Diageo Form 20-F 2025

Summary of our most important climate risks and opportunities

Risks
Risk description	Water scarcity Increasing water scarcity and water stress affects our ability to continue to source from and produce in water- stressed areas.	Agricultural raw material availability Climate-related impacts on agricultural material availability cause scarcity or price increases.
Category	Physical – chronic	Physical – chronic
Timeframe(1)	Short-term (one to five years), medium-term (five to 10 years) and long-term (10 to 30 years)	Medium-, long-term
Impact (if not mitigated)	Moderate(2)	Moderate(2)
Response examples	•Improvements in water-use efficiency in our operations, with more ambitious targets at water-stressed sites. •Water replenishment plans in 100% of water-stressed areas. •Collective action activities to improve water security in Diageo's ‘priority water basins’. •Nature-based solutions that support climate mitigation, adaptation and water replenishment. •Exploring alternative formats and ingredients with potential to reduce water use. •Rainwater harvesting, aquifer recharge, dam de-silting.	•Regenerative agriculture adaptations. •Smallholder farmer support. •Development of drought-resistant ingredients (e.g. sorghum, anise and barley varieties). •Alternative sourcing locations. •Substitution with alternative crops. •Increased use of cover cropping. •Improved water management in agricultural practices.
Risk description	Input costs Policy changes (carbon taxation, shift to renewables) cause increases in input costs.	Consumer behaviour Consumers prioritise purchasing more sustainable products, rejecting those perceived to have a negative environmental impact.
Category	Transition – policy/legal	Transition – market
Timeframe(1)	Short-, medium-term	Short-, medium- and long-term
Impact (if not mitigated)	Moderate(2)	Moderate(2)
Response examples	•Supply chain decarbonisation. •Engaging suppliers in low-carbon technology options for their operations. •Reduced packaging weight.	Increased recycled content in packaging. Developing circular product offerings. Purchasing more sustainably-grown raw materials. Communicating these changes to consumers. Reduced packaging weight.
Opportunities
Opportunity description	Supply chain decarbonisation Reducing our Scope 1, 2 and 3 emissions lowers our exposure to carbon taxes and related costs, and improves our reputation with customers and consumers.	Innovation in sustainable products and packaging Developing more sustainable products meets consumers increasing demands.
Category	Transition – policy/legal	Transition – market
Timeframe(1)	Short-, medium-term	Short-, medium-term
Impact (if not realised)	Moderate(2)	Moderate(2)
Response examples	•Decarbonisation programme and capital investment in our operations. •Renewable energy investments. •Regenerative agriculture programme. •Collaboration, partnerships and capability building within our supply chain.	•Innovation to deliver more sustainable products (e.g. refillable and reusable packaging, alternative packaging materials). •Everpour, an innovative new circular keg and integrated bottle dispense system.

(1)Timeframes chosen align to those used in our scenario analyses, where short-term (one to five years) reflects the typical strategic planning timeframe, medium-term (five to 10 years) includes

the timeframe to 2030 and long-term (10 to 30 years) includes the timeframe to 2050.

(2)'Low' impact is defined as having a negligible impact on customer service, or an absorbable disruptive impact on one or more brands. 'Moderate' impact is defined as disruption to production/

supply chain creating an inability to service a small portion of our customer base, the impact of which is manageable; or a significant short-term impact on one or more of our core or local

priority brands that is absorbable by the business. 'High' impact is defined as inability to service a significant portion of our customer base, or major reputational damage.

Results of our nature risk assessment

The greatest risk to our agricultural raw material sourcing arises from

water scarcity, as much of our agricultural materials are grown in water-

stressed regions. These results aligned with the observations from our

climate scenario analysis. The raw materials with the highest relative

nature impact

were assessed as agave, broken rice, sugarcane, sorghum and barley.

We are making continuous progress in understanding our nature-related

dependencies, impacts, risks and opportunities, while integrating these

insights into our broader strategy. Our integrated approach aims to

recognise the ways in which taking holistic action on climate change,

water stewardship and regenerative agriculture can build resilience.

50 Diageo Form 20-F 2025

PIONEERING GRAIN TO GLASS SUSTAINABILITY continued

Our strategy for grain-to-glass sustainability

Our sustainability strategy acknowledges the breadth of the environmental

and social consequences of a changing climate and our dependencies on

nature and people. It recognises the interlinkages between climate,

nature, agriculture and people, and the connections to our value chain.

Our strategy, underpinned by targets, addresses our most material

impacts, risks and opportunities, primarily related to water use and

greenhouse gas emissions. The strategy reflects the complexity of the

challenges faced by society and the environment and is reviewed regularly

as regulations evolve or we gain more information on the timeframe

required to address systemic issues, like greenhouse gas emissions. By

acting on, delivering and regularly reviewing our commitments, we are

enhancing our business resilience while safeguarding our licence to operate

and grow.

Whilst the fundamentals of our strategy to preserve water and take a

focused approach to greenhouse gas emission reductions have not

changed, we undertook a review of the targets we use to measure

progress. This review, conducted as part of our regular update of

Science Based Targets initiative (SBTi) targets, resulted in changes to

greenhouse gas emission reduction percentages and timeframes to

achieve those reductions (summarised on page 53). We also reframed

our packaging targets due to both external factors and our growth

ambitions, shifting our focus to recycled content of our packaging,

with lightweight packaging reporting focused on examples, rather than

a formal target.

Our greenhouse gas and water roadmaps outline the projects needed

to deliver our targets. These plans are backed by capital investment

and are regularly reviewed to build confidence in our ability to deliver

our targets. Enhancing and digitising our data has and will continue to

provide more insight into what is required to deliver our strategy.

In 2020, we announced the intention to invest $1.2 billion between

2020 and 2030 to accelerate our ambition to preserve water and

reduce greenhouse gas emissions, with $358 million invested so far.

After updating our greenhouse gas emission reduction targets, we will

be further phasing our investment beyond 2030 and reconsidering the

total amount funded by Diageo. The timing and level of future

investment are dependent on infrastructure changes and regulation,

which we are monitoring. We are committed to optimising scale and

returns through partnerships and our own funding.

Integrating nature risk into our climate risk strategy

In alignment with the recommendations of the Taskforce on Nature-

related Financial Disclosures (TNFD), we have commenced assessing

our nature-related dependencies, impacts, risks and opportunities and

we are building this into our strategic approach on nature. We

conducted a nature baseline during fiscal 24, that encompassed our

agricultural upstream supply chains, our direct operations and an

initial assessment of parts of our packaging supply chain. We identified

material pressures across the value chain and estimated our

contribution to environmental impacts. We identified the geographic

areas where these could be harmful to nature, using datasets covering

four dimensions of nature: land, water, biodiversity and ecosystem

services. In fiscal 25, we continued this work to further our

understanding of our nature-related dependencies, impacts, risks

and opportunities.

	Ewan Andrew President Global Supply and Procurement & Chief Sustainability Officer		Daniel Mobley Global Corporate Relations Director
	We are proud of the real world impact of our progress so far and have taken forward significant learnings to help us refine our ambition for the future.'		Doing business the right way is at the core of our Growth Ambition. We are accelerating our action on water, delivering impactful change to address our most material environmental risks.'

51 Diageo Form 20-F 2025

Key Sustainability Targets

Water efficiency(1)
Improvement in water use efficiency in water-stressed areas
Year	%
Target by 2030 Reduce water use in our operations with a 40% improvement in water use efficiency	(40)%
2025 cumulative progress	(20.6)%
2024 cumulative progress	(18.5)%
2025 performance Percentage change in water efficiency index from the prior year	(2.6)%
Improvement in water use efficiency across the company
Year	%
Target by 2030 Reduce water use in our operations with a 30% improvement in water use efficiency	(30)%
2025 cumulative progress	(15.8)%
2024 cumulative progress	(12.9)%
2025 performance Percentage change in water efficiency index from the prior year	(3.3)%

Water replenishment(3)
Year	%
Target by 2026 Replenish more water than we use for operations in water-stressed areas	100%
2025 cumulative progress	84%
2024 cumulative progress	70%

Water collective action(1)
Year
Target by 2030 Engage in collective action in all priority water basins to improve water accessibility, availability and quality and contribute to net positive water impact	12
2025 cumulative progress	9
2024 cumulative progress	8

Emissions from our direct operations(2)
Year	%
Target by 2030 Reduce our direct operations greenhouse gas emissions by 50% (Scope 1 and 2)	(50)%
2025 cumulative progress	(18.8)%
2024 cumulative progress	(14.4)%
2025 performance Percentage change in absolute greenhouse gas emissions (direct and indirect greenhouse gas emissions by weight (market/net based) from the prior year	(5.2)%

Emissions from our value chain(2)
Year	%
Target by 2030 Reduce our value chain (Scope 3) greenhouse gas emissions by 26%	(26)%
2025 cumulative progress	(10.2)%
2024 cumulative progress	(11.5)%
2025 performance Percentage change in absolute greenhouse gas emissions (ktCO2e) from the prior year	1.5%

Regenerative agriculture programmes(1)
Year
Target by 2030 Develop regenerative agriculture programmes in five key sourcing landscapes	5
2025 cumulative progress	5
2024 cumulative progress	4

increasing recycled content
Year	%
Target by 2030 Continue our work to increase recycled content in our total packaging (increasing the percentage of recycled content in our packaging to 50%)	50%
2025 cumulative progress	46%
2024 cumulative progress	42%
2025 performance Change in percentage of recycled content in fiscal 25	4%

(1) Baseline year fiscal 20

(2) Baseline year fiscal 22

(3) Baseline year fiscal 16

52 Diageo Form 20-F 2025

PIONEERING GRAIN TO GLASS SUSTAINABILITY continued

Preserve Water for Life

Water is the most important ingredient in our products. It is also a

precious shared resource that is facing increasing pressure in many

parts of the world due to the impacts of climate change and the

competing demands for freshwater resources. As outlined in our

physical risk assessment, water stress is our most important climate

risk.

Water stewardship forms a key pillar of our 'Spirit of Progress' strategy,

contributing to our climate resilience.

Our water strategy, which aims to build resilience and enable growth,

has four interdependent pillars that are integrated with other actions

to address impacts on climate, nature and people:

Operations: delivering industry-leading water management across our

own sites, including improving water-use efficiency in our operations

and replenishing the water we use in water-stressed areas.

Supply chain: amplifying water stewardship across our supply chain,

focusing on agriculture and partnering with suppliers in priority basins

on water replenishment and collective action. 

Communities: building resilience in our communities, including

providing access to water, sanitation and hygiene (WASH).

Advocacy: driving systemic change, including leading and/or

participating in collective action in our priority water basins to drive

positive change.

More information on our refreshed water strategy can be found on our

website at www.diageo.com.

In fiscal 25, we advanced our ongoing efforts to extend our water

replenishment and collective action programmes to include indirect

water use by key third-party operators in our priority water basins. We

are increasing the number of these priority water basins to accelerate

action, and will incorporate extended collective action and

replenishment targets in fiscal 27.

We also aim to leverage our brands to deliver our goals, such as Don

Julio's support for water replenishment in Jalisco, and increase our

engagement with governments to encourage investments and

progressive climate and water policy. Our ambitious actions on water

will help to ensure our sites, supply chain and communities build

resiliency in a changing climate.

Water efficiency

Our focus on water-stressed areas has continued to deliver strong water-

use efficiency performance with a 2.6% improvement in the water

efficiency index versus fiscal 24 and 20.6% improvement since our fiscal 20

baseline.(1) This was primarily driven by efficiency improvement initiatives

at our sites in East Africa. In fiscal 25, the volume of water recovered and

recycled in water-stressed areas reached approximately 816,000 m3 –

equivalent to 16.4% of the total water used in these areas. 

Our performance across the company on water-use efficiency has improved

by 3.3% in comparison to the previous fiscal and by 15.8% since our fiscal 20

baseline.(1) This was mainly driven by a range of improvement initiatives

delivered in our Scotland distilleries and our Runcorn and St. James' Gate

beer sites in addition to the efficiency improvements initiatives from our

East Africa sites.(2)

Innovation and new technologies continue to be essential for achieving

our water-use efficiency targets and improving water management.

Through Diageo Sustainable Solutions (DSS) we are continuously looking

to identify, test and integrate new technologies into our plans. Last

year, we launched a DSS innovation round focused on five water

challenges, including efficiency and maximising wastewater value. We

have now selected three partners to demonstrate their technologies,

one of which has been piloted at one of our sites to test their

alternative to reverse osmosis. This complements our ongoing pilot

partnership with Aquacycl in our La Primavera site, where we have

demonstrated the capability of this technology to be integrated as

pretreatment within existing wastewater treatment systems, achieving

over 80% removal in biological oxygen demand (BOD).

Previous water efficiency methodology	Fiscal 25	Percentage change compared to fiscal 24	Improvement compared to fiscal 20 baseline
Water use efficiency per litre of product packaged (litres/litre) - across the company	3.98	6.4% improvement	14.5% improvement
Water use efficiency per litre of product packaged (litres/litre) - water-stressed areas	3.25	1.1% improvement	19.6% improvement

Water replenishment

Our water replenishment programme continues to deliver beneficial

impact, with another strong year of delivering local water projects. We are

on track to reach our fiscal 26 target of replenishing more water than we

use for our operations in water-stressed areas. In fiscal 25, we

implemented projects that have the annual volumetric replenishment

capacity of 3,084,000 m3 of water. Cumulatively we have replenished 84%

of our estimated fiscal 26 volume with projects such as reforestation,

wetland restoration, agricultural water supply improvements, leak repair

and rainwater harvesting.

In fiscal 25, we completed 30 replenishment projects in 10 countries,

cumulatively implementing over 150 projects between fiscal 21 and

fiscal 25. In Jalisco, Mexico, we were proud to partner with the local

authorities in Atotonilco, where we have two tequila distilleries, to

repair local infrastructure which was leaking water. The project will

reduce water loss for the community by over 1.73 million m3 of water per

year. In Türkiye, we continued to progress agricultural water supply

projects, this year providing more water for farming communities in

Mersin’s Gülnar district.

An important part of our approach on water is that it remains people-

centric. We have committed to providing access to clean water,

sanitation and hygiene (WASH) in water-stressed communities near our

sites and in water-stressed areas that supply our raw materials. In

fiscal 23, we reached our 2030 target, meaning all nine of the markets

included in our target invested in WASH projects since 2020. We

maintain this commitment, investing every year to 2030. For more

information, please refer to our ESG Reporting Index.

(1) The water efficiency index across the company and in water-stressed areas was materially impacted by the disposal of Guinness Nigeria PLC. The impacts of Guinness Nigeria PLC on water use

efficiency were removed from both the baseline and the performance in the intervening years.

(2) Under the previous water efficiency methodology, water efficiency was measured in litres of water per litre of product packaged (litres/litre). Performance under the previous methodology

continues to be measured for long-term incentive programmes (refer to page 123). Under the new methodology, the water efficiency index – across the company was 84.2 and the water efficiency

index – water-stressed areas was 79.4 in fiscal 25.

53 Diageo Form 20-F 2025

Water Collective Action

We recognise that businesses need to partner with other water users,

non-governmental organisations (NGOs) and governments to build

climate resilience and ensure water security. Our collective action

programme embraces a collaborative approach towards water

stewardship in our priority water basins across 10 countries.

The collective action programme involves multi-stakeholder

partnerships including other companies, NGOs, public sector

organisations and communities. Together these partnership initiatives

aim to pool knowledge, expertise and resources to identify and

implement solutions to address shared water challenges.

In fiscal 25, we joined the White Volta Basin Watershed Fund, which

aims to enhance water security in the Greater Tamale area in Ghana,

where we source raw materials. We also continued to participate in

collective action groups in Scotland, Uganda and India, with multiple

aims including implementation of nature-based solutions and

advocating for equitable access to water. The percentage of our

priority water basins with collective action participation was 75% at

the end of fiscal 25 (9 out of 12 basins).

We continue to act as water basin champion in the Santiago Lerma

River Basin in Mexico, where we have driven the transition of Charco

Bendito collective action; the Upper Godavari River Basin in India; and

Kenya’s Upper Tana Basin where our increased investment will extend

the Upper Tana-Nairobi Water Fund’s work into new counties.

As basin champion, Diageo commits to providing overall leadership on

efforts to rejuvenate selected basins. For example, we have

established a project management office to co-ordinate activities for

The Godavari Initiative in India and played a leading role in

transforming the governance and ambition of Charco Bendito in

Mexico, increasing corporate funding and participation from 10 to 12

companies. In Kenya, our cumulative contribution to the Upper Tana-

Nairobi Water Fund from fiscal 24 to date has resulted in over 580,000

trees planted, over 600 water pans constructed to promote rainwater

harvesting, 27 drip irrigation kits provided to enhance water-use

efficiency and increase yields, 52,500 metres of terraces, 52,500

metres of grass strips and 17,500 metres of permanent river bank

buffer strips to promote sustainable land management.

Advocacy

At COP29 in Baku, we were among businesses continuing to call for

more action on water and climate resilience. We also attended the UN

SDG Summit in New York and World Water Week in Stockholm to share

our ambition and learnings, and advocate for more companies and

partners to scale up collaboration. We are members of leading

international organisations such as the Water Resilience Coalition and

Alliance for Water Stewardship, and we have strategic partnerships with

WaterAid and The Nature Conservancy that support this call to action.

Our carbon strategy

We are committed to a low-carbon future and following a science-

based approach to drive the pace and scale of change required. In

fiscal 25, we continued to reflect on learnings from our first five years

tracking against our ‘Spirit of Progress‘ greenhouse gas emissions

reductions targets.

Based on those learnings, new targets were approved by the Board and

the Science Based Targets initiative (SBTi). They include interim, near-

term targets for direct operations and value chain emissions, as well as

long-term net zero(1) targets. Our targets resulted from analysis of all

categories of material emissions in our own operations and value chain

to reflect the changes in our business since our first submission of SBTi

targets in 2021. We also updated our baseline year to fiscal 22 to align

to normalised production levels, which were not impacted by the

Covid-19 pandemic and adjusted packaging targets in alignment with

our revised value chain emissions reductions targets.

As required by SBTi, we further disaggregated our targets between

those which are Forest, Land and Agriculture (FLAG) emissions and

other (Non-FLAG) emissions, which we will report on separately in our

ESG Reporting Index.

Target reduction from baseline fiscal 22(2)	Date to achieve	Metric
Reduce our direct operations greenhouse gas emissions by 50% (Scope 1 and 2)	2030	Percentage change in absolute greenhouse gas emissions (direct and indirect greenhouse gas emissions by weight (market/net based))
Become net zero(1) in our direct operations (Scope 1 and 2)	2040
Reduce our value chain (Scope 3) greenhouse gas emissions by 26%	2030	Percentage change in absolute greenhouse gas emissions (ktCO2e)
Become net zero(1) in our full value chain	2050

(1) Net zero emissions are reached when anthropogenic (i.e. human-caused) emissions of

greenhouse gases into the atmosphere are balanced by anthropogenic removals over a

specified period. A science-based approach to net zero covers emission Scope 1, 2 and 3

with direct abatement of approximately 90% from our emissions baseline and up to 10% of

high-quality certified carbon offsets to neutralise hard-to-abate residual emissions to

close the gap to zero. Targets are based on our SBTi target boundary.

(2) Fiscal 25 is the first year that we measure progress against our 2022 baseline. Fiscal 24

progress reported has been restated to reflect this new baseline year.

54 Diageo Form 20-F 2025

PIONEERING GRAIN TO GLASS SUSTAINABILITY continued

We refined our decarbonisation roadmaps detailing the measures we will take to reduce greenhouse gas emissions and ensuring that new sites are

developed with low emission technologies embedded from the outset. Across our supply chain we are clear on the decarbonisation levers that we

control and the solutions that require collaboration with others to progress. In due course, we will be publishing our Climate Transition Plan, which will

detail the pathway to achieve our targets, with more detail on the actions we intend to take to meet our ambitions. Our approach to deliver will

include:

Scope 1 (5.5%)(1)	Scope 2 (0.1%)(1)	Scope 3 (94.4%)(1)
•Embedding energy efficiency into our processes.  •Switching to renewable electricity, fuel and heat across our sites. •Utilising renewable energy certificates, innovations, partnerships and carbon removals to close the gap.(1)	•Continuing to switch to renewable electricity. •Creating additional renewable energy capacity to power our sites, exporting surplus energy to the local grid, through on-site developments and using power purchase agreements.	•For Scope 3 emissions, our strategy includes three areas: •Diageo enabled projects: projects where we have the greatest control and confidence in delivery. •Selective engagement: projects that engage and influence external stakeholders. •Strategic innovation: projects that bring disruptive new products and approaches.

We acknowledge that realising this scale of transformation will require partnering for systemic change and delivering decarbonisation solutions in

areas outside our direct control. Not all our suppliers and partners are at the same stage, nor is the necessary external infrastructure always

available at scale.

We recognise that policy frameworks and market signals are not always incentivising the necessary pace of change across all markets in which we operate.

We are focusing on the areas where we can affect the biggest positive impacts across our value chain, partnering with others and advocating for change to

unlock solutions to some of the external challenges we face.

Streamlined Energy and Carbon Reporting (SECR)
	2021	2022	2023	2024	2025
Total Global energy consumption (MWh)	3,123,048	3,299,189	3,267,486	3,296,096	3,289,237
Total UK energy consumption (MWh)	1,050,459	1,078,943	1,223,347	1,259,921	1,244,702
Direct (MWh)	913,581	939,092	1,076,462	1,105,054	1,087,704
Indirect (MWh)	136,878	139,851	146,885	154,867	156,998
Total UK direct and indirect greenhouse gas emissions (kt CO2e)	71	83	134	118	101
Scope 1	71	83	134	118	101
Scope 2	—	—	—	—	—
Market-based (net) intensity ratio of greenhouse gas emissions (g CO2e per litre of packaged product)	119	104	105	94	85

Total direct and indirect greenhouse gas emissions by region by year(2)
Total direct and indirect greenhouse gas emissions by weight (market/net based) (1,000 tonnes CO2e)
Region	2022	2023	2024	2025
North America	100	83	86	77
Europe	144	193	176	162
Asia Pacific	8	6	5	5
Latin America and Caribbean	37	27	9	15
Africa	93	55	51	51
Diageo (total)	382	364	327	310
of which
direct greenhouse gas emissions	376	359	323	306
indirect greenhouse gas emissions	6	5	4	4

(1) This information reflects current management estimates and expectations. It is based on assumptions available at the time of reporting, and both underlying data and future developments may

evolve. As a result, our projections and interpretations may change. See pages 47–49 for further details on how climate change may affect Diageo and the actions we are taking to manage and

mitigate related risks.

(2) The table covers our market-based direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions.

55 Diageo Form 20-F 2025

Direct operations

In fiscal 25, we decreased greenhouse gas emissions from our direct

operations by a further 5.2% versus fiscal 24. Investing in renewable

energy and improved energy performance across our global footprint

have enabled us to reduce our emissions this year.

We have benefitted from the continued use, and optimised output,

from our on-site bioenergy facilities across multiple markets.

Additional purchased liquid biofuel across a number of scotch distillery

and malting sites has helped to drive our emission reduction across our

direct operations greenhouse gas emissions (Scope 1) this year. The

percentage of renewable energy used as a proportion of total energy

across our direct operations footprint increased in fiscal 25.

Our energy performance has improved across our largest markets, driving

emission savings and enabling decoupling of emissions from production.

Several incremental and continuous improvement projects have delivered

positive energy efficiency outcomes, particularly across our brewing and

distilling sites. In our scotch footprint, we have successfully implemented

a number of heat recovery, process optimisation and insulation projects,

improving our energy efficiency. Our breweries in East Africa have

continued to optimise their processes and use of bioenergy, resulting in

an overall energy efficiency improvement. At our packaging sites in the

United Kingdom, Europe and Australia, electrification of heat, pasteuriser

process optimisation and replacement of old equipment has also led to

energy efficiency gains. 

Our continued reduction of greenhouse gas emissions has driven a

cumulative saving of 18.8% in greenhouse gas emissions versus our

fiscal 22 baseline. We have delivered these savings through investment

in bioenergy plants in East Africa, Scotland and Mexico, with additional

savings being delivered through electrification of heat, fuel switching

to lower emission alternatives like biofuel or renewable gas and

optimising our energy use. We source renewable electricity widely

across our portfolio, investing in on-site solutions as well, particularly

across sites in Africa and, Latin America and Caribbean which has

helped us reduce our indirect greenhouse gas emissions (Scope 2) from

our fiscal 22 baseline. 

Value chain emissions

In fiscal 25, we continued to review our greenhouse gas emissions

inventory and calculation methodologies, adjusting our assumptions to

further refine our full greenhouse gas emissions profile. We enhanced

our value chain emissions (Scope 3) reporting, ensuring that any

material updates, including to emissions factors, were applied across

all prior years back to our revised fiscal 22 baseline, in line with our

Non-Financial Reporting Boundaries and Methodologies.

Our updated Scope 3 emissions target represents the weighted average

of our targets to reduce Forest, Land and Agriculture (FLAG) and non-

FLAG (energy and industry) emissions. This separation of the emissions

target supports prioritisation, and focuses our efforts on where we can

make the most impact.

When compared to the prior year, our fiscal 25 Scope 3 emissions

increased by 1.5%, which was mainly driven by increased volumes of

finished products. This included increases in purchased packaging

materials (glass bottles, closures and kegs). Packaging improvements

from lightweighting programmes and switching to lower emission

formats reduced some of the impact from these increased emissions.

Our logistics and distribution emissions increased between fiscal 24 and

25, corresponding to increased volumes but also impacts from

increased distances and emission factor updates.

Our emissions associated with raw material and ingredient purchases

also increased slightly.

Our Scope 3 greenhouse gas emissions have decreased by 10.2%

compared to our fiscal 22 baseline. Coupled with volume decreases,

progress to our 2030 target has been enabled through packaging

sustainability initiatives like lightweighting, format changes and

increased recycled content. We have partnered with a number of

suppliers to optimise our raw material sourcing and better understand

our value chain emissions.

In fiscal 26, we will continue to improve our supplier engagement and

our Scope 3 decarbonisation roadmaps, particularly focusing on

mapping our FLAG initiatives, targeting areas that deliver emission

reductions and value for the business. We recognise that external

factors are the driver of Scope 3 emissions, which is why we continue

to engage with our key suppliers to enhance our Scope 3 data and to

find solutions together.

Moving towards regenerative agricultural sourcing

Businesses have a shared interest in helping to restore the natural

resources on which we all depend. We are committed to supporting the

economic, social and environmental sustainability of our agricultural supply

chains.

In fiscal 25, we reached our target of launching five regenerative

agriculture programmes across key sourcing geographies. Our

programmes, which ran through the fiscal, covered agave in Mexico,

broken rice in India, barley in Ireland and separately, wheat and barley

in the United Kingdom.

We continue to learn from the regenerative agricultural programmes in

place, with critical data being gathered to inform an updated strategy

to address the dependencies, impacts, risks and opportunities from our

agricultural sourcing activities. Sustainable sourcing is a critical lever

to reducing carbon emissions, water usage and biodiversity loss. In

fiscal 26, we will extend the target to deliver a total of 10

collaborative regenerative agriculture programmes between 2020 and

2030, aiming to address key climate, nature and water risks.

Reducing emissions through packaging improvements

Greenhouse gas emissions from packaging represent 33% of our total

Scope 3 value chain emissions. We are committed to reducing our value

chain carbon footprint by increasing our recycled content, reducing

single-use packaging, reducing packaging weight and deploying and

scaling circular business models.

Given that reducing the absolute weight of our packaging competes

with volume growth, we will no longer be reporting against a specific

packaging weight reduction target. However, we will continue pursuing

lightweighting projects which are good for both the business and

emissions reduction, reporting on examples each year. We have also

revised our 2030 ambition for recycled content in our packaging to 50%

(previously 60%), based on our latest forecasts for cullet availability.

This year, we further integrated our technical supply, marketing and

innovation teams to deliver the triple win: increased value for our

consumers, reduced greenhouse gas emissions and improved bottom

line performance through cost efficiency or top line growth.

56 Diageo Form 20-F 2025

PIONEERING GRAIN TO GLASS SUSTAINABILITY continued

In fiscal 25, we delivered a number of key projects including:

•Reducing the glass bottle weight of our core size Johnnie Walker

Gold, Green and Double Black Label as well as Baileys and Cîroc

brands. This programme delivered an average 15% weight reduction

and a total of 5,100 tonnes CO2e savings per annum across all brands

in scope.

•Expanding the availability of Smirnoff Ice and Gordon's Space in cans

for select markets, providing the opportunity to move away from

glass and resulting in 530 tonnes CO2e savings.

•Launching a pilot programme for Johnnie Walker Black Label in a

paper bottle, building on previous work for Baileys and employing a

different solution as we continue to test and learn from consumer

reaction to new packaging formats for spirits.

•Removing excess packaging including gift cartons from Zacapa 23

and optimising the carton design for scotch brands including Johnnie

Walker Gold and Green Label.

We continue to trial and test circular solutions for packaging with

Everpour, our first in-house led bespoke spirits keg and dispense system for

the on-trade, with each keg replacing 500 single use 70cl glass bottles.

Increasing recycled content in our packaging

In fiscal 25, we surpassed our recycled content in plastic bottles

target.

Our recycled content in plastic bottles was 43% versus a target of 35%

which we had reset in fiscal 24 from 40% due to supply constraints,

technical barriers and legislation changes. We overcame these

challenges to drive a 21% increase within the year and will continue to

plan for incremental improvements in future years.

Our total packaging recycled content inclusion increased to 46% versus

our 2030 target of 50%. We continue to see year-on-year improvement

across our packaging categories, primarily driven by recycled content

in glass bottles.

Increasing glass cullet availability through improved collection and

sorting schemes in partnership with our glass vendors continues to be a

focus area for the business and we are engaging our key packaging

suppliers across a comprehensive range of business objectives.

Sustainability initiatives and the ability to help unlock industry-wide

challenges are central to our joint business planning.

57 Diageo Form 20-F 2025

How we have reported consistently with the recommendations of the Task Force on Climate-related

Financial Disclosures (TCFD)

In this year's disclosures, we have complied with the FCA's UK LR6.6.6R (8). Our climate-related financial disclosures are considered to be consistent

with the TCFD's recommendations and recommended disclosures, as illustrated in the index below.

TCFD recommendation	Consistency
GOVERNANCE See page 46
a.Describe the board’s oversight of climate-related risks and opportunities.	Yes. See page 46.
b.Describe management’s role in assessing and managing climate-related risks and opportunities.
RISK MANAGEMENT See pages 47-49
a.Describe the organisation’s processes for identifying and assessing climate- related risks.	Yes. See pages 47-49. Having completed comprehensive risk assessments, our focus is now on ensuring appropriate adaptation plans are in place for all risks identified.
b.Describe the organisation’s processes for managing climate-related risks.
c.Describe how processes for identifying, assessing and managing climate- related risks are integrated into the organisation’s overall risk management.
STRATEGY See pages 47-50
a.Describe the climate-related risks and opportunities the organisation has identified over the short-, medium-, and long-term.	We have described risks and opportunities for our business, in all of our owned operating locations and our most important third-party operations, as well as the impact of those risks and opportunities on our strategy. We have modelled the resilience of our strategy under different climate-related scenarios. We have co-developed a scenario analysis tool with climate experts to enable regular updates to our scenario analyses. The precise risks and opportunities that were modelled in our scenario analysis are outlined in the Non-Financial Reporting Boundaries and Methodologies, pages 4-7.
b.Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning.
c.Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
METRICS & TARGETS See pages 50-56
a.Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.	Yes. See pages 50-56.
b.Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks.	Yes, for Scope 1 and 2 see page 51 and 53-55. For Scope 3 see our ESG Reporting Index on page 41. We are continually enhancing our Scope 3 GHG emissions footprint through supplier engagement and refining our data granularity in line with GHG accounting standards.
c.Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.	Yes. See pages 50-56.

58 Diageo Form 20-F 2025

CHAMPION INCLUSION AND DIVERSITY

Champion inclusion and diversity

Championing inclusion and diversity helps us drive

performance, and is crucial to our purpose of

‘celebrating life, every day, everywhere’.

Key Ambitions(1, 2, 3)

Gender representation of our leadership
2030 Ambition Champion gender diversity, with an ambition to achieve 50% representation of women in leadership roles by 2030					50%
Role	Men	%	Women	%	Total
Leadership population (3)	335	57%	256	43%	591

Ethnic representation of our leadership(4)
2030 Ambition Champion ethnic diversity, with an ambition to increase representation of leaders from ethnically diverse backgrounds to 45% by 2030								45%
Ethnically diverse	%	Non- ethnically diverse	%	Decline to self identify	%	Not disclosed	%	Total
265	46%	272	48%	17	3%	17	3%	571

(1) Statements on representation should be considered an ambition for Diageo, not a target.

(2) This data is calculated as an average across the four quarters of fiscal 25.

(3) Leadership population encompasses the Executive Committee and senior managers.

(4) 20 leaders are based in countries that do not collect ethnicity data. As such, these leaders are not in

scope.

For more details, see the Non-Financial Reporting Boundaries and Methodologies on our website.

Building a thriving and inclusive hospitality industry
Year	Number of people reached
2030 Ambition Provide business and hospitality skills to 200,000 people, increasing employability and improving livelihoods through Learning for Life and our other skills programmes	200k
2025 cumulative progress	133k
2024 cumulative progress	98k

For more details, see the website www.diageo.com.

At Diageo, our purpose is to ‘celebrate life, every day, everywhere’ –

we want everyone to feel invited and included. We believe that

inclusivity is not just the right thing to do, it makes good business

sense. We remain committed to our ‘Spirit of Progress‘ ambitions,

recognising the need to continually evolve, whilst reinforcing our

commitment to advancing inclusion and cultural transformation, so

every employee can thrive.

As a global business with stretching growth ambitions, it is imperative

we employ the most talented and diverse teams and create a truly

inclusive culture to help us reach and appeal to the broadest range of

consumers who enjoy our brands. We look to champion inclusion and

diversity across our entire business – with our people, through our

value chain, across our brands and within the communities in which we

operate.

A culture that supports all

We believe everyone should work in an environment where they are

empowered, respected and their contributions are valued. In our most

recent survey, 83% (fiscal 24: 81%) of employees would recommend

Diageo as a great place to work, and 85% (fiscal 24: 83%) agreed that

people from different backgrounds can be themselves and thrive.

Building an inclusive culture through policies and

practices

In recent years, we have developed policies and practices to support

employees at various life stages, partnering with employee resource

groups (ERGs) and external experts. In fiscal 25, we expanded our

'Carers Leave' policy to 30 countries across Asia Pacific, Latin America

and Caribbean, and North America, offering 10 days of paid leave for

dependent care. Over 470 employees utilised more than 1,500 days in

fiscal 25. Our long-standing Family Leave Policy remains well-adopted,

with over 1,400 parents using it in fiscal 25. We are proud to have

received external recognition in Hungary, North America, and the

United Kingdom as a top employer for parental benefits. In partnership

with our employees and the Spirited Women Network, we continue to

strengthen our approach to ensure a smooth and inclusive return-to-

work experience for all.

This fiscal, the 'Fertility Support Guidelines’ providing paid leave to

assist all employees undergoing fertility treatment, were extended to

Australia, Caribbean and Central America (CCA), and Middle East and

North Africa (MENA) markets. We also refreshed and revised our

‘Global Disability Inclusion’ guidelines to include broader emphasis on

Universal Design Principles to improve accessibility, usability and

inclusivity in our digital and physical spaces.

We remain committed to creating an age-positive environment where

all employees can feel valued at each life stage. In fiscal 25, we

piloted an age inclusion initiative within our Scotland Supply Chain and

Procurement business, engaging employees through surveys and focus

groups. Additionally, 60 employees participated in a 12-week self-paced

life coaching programme, delivered in partnership with our external

partner, 55/Redefined, providing valuable insights to better support

colleagues in later career stages.

Supporting female talent for the future

Since setting our 2030 ambition in 2020 to reach 50% women in

leadership, we have increased representation from 39% to 43%. This

reflects our long-term commitment to building a more inclusive

leadership team. We are investing in the next generation of female

leaders, with a focus on underrepresented functions such as

commercial, digital, general management and supply, particularly

across countries in Africa and Asia Pacific, where local cultural norms

have created disadvantages.

Our commitment to sustainable progress is underpinned by focused

talent development and succession planning. Our ‘Horizons’

programme accelerates emerging general managers, with a goal of at

least 50% female participation. In Latin America and Caribbean,

‘Striding Women’ provides coaching and leadership training, and in

Africa, 23 women graduated from the ‘BLOOM’ programme, delivered

in partnership with Strathmore University to prepare women for future

senior roles.

In the 2025 FTSE Women Leader Review, Diageo ranked fourth overall

in the FTSE 100 for combined executive and executive direct report

roles held by women, up from eighth in 2024. This progress highlights

our continued commitment to advancing gender equality in leadership.

Supporting our ethnically diverse talent for the future

We are proud for a second consecutive year to have maintained 46%

ethnically diverse leadership representation, surpassing our 2030 goal.

We achieved this through 46% of internal promotions and 54% of external

appointments into the leadership cohort being ethnically diverse in fiscal

25. We are proud to continue participating in the Parker Review Report

59 Diageo Form 20-F 2025

STRATEGIC REPORT GOVERNANCE report FINANCIAL STATEMENTS ADDITIONAL INFORMATI ON

2025, where Diageo stands out for its strong ethnic diversity at both

Board and senior leadership levels, significantly surpassing the FTSE 100

average. Our people continue to demonstrate their commitment to our

inclusion journey by voluntarily sharing information about how they self-

identify their ethnic background. We are proud that 97% of our

leadership population and 72% of all employees, in the markets where

data collection is live, have completed the ethnicity field. We continue

to drive local initiatives to cultivate leadership pipelines. In Brazil, more

than 120 Diageo employees took part in the cross-industry MOVER

programme benefiting from leadership capability build, mentoring and

postgraduate scholarships. Of the cohort, 62% identified as Pardo, 38% as

Black and 6% as disabled. In Ireland, fiscal 25 marked the third annual

World Culture Day, led by the REACH (Race, Ethnicity and Cultural

Heritage) Network, celebrating the market’s rich diversity with

representation of more than 15 nationalities.

Leveraging the power of our Resource Groups locally

We empower our people to drive inclusion and diversity through over

60 global Employee Resource Groups (ERGs). These ERGs continue to

grow in influence, shaping strategy, policy and brand campaigns.

Sponsored by senior leaders and open to all, ERGs spark meaningful

conversations and engagement across our business. With more than 20

ERGs focused on advancing gender equality, including three dedicated

specifically to engaging men across Africa, we continue to drive

inclusive dialogue and meaningful action. Our 2025 International

Women’s Day celebrations embraced the theme ‘Rights. Equality.

Empowerment. For ALL,’ with three global sessions attracting nearly

2,000 live participants and over 30 local activations across the month

of March. This year, our South East Asia chapter hosted conversations

on masculinity and breaking gender stereotypes; and in Tanzania’s

B.R.E.W. (Brotherhood, Responsibility, Equality and Wellness) Network

expanded its reach, deepening its focus on men’s holistic growth and

inclusive leadership.

Promoting inclusivity through our value chain

We strive to have a positive impact on society and promote sustainable

growth by providing resources, learning and livelihood opportunities for

communities where we source, make and sell our brands. All our

programmes are ‘inclusive by design’ aiming for 50% of beneficiaries to

be women, whilst also adopting inclusive recruitment practices,

providing training content and accessibility, as well as dedicated

modules on inclusion and diversity.

In fiscal 25, Learning for Life (L4L), our business and hospitality skills

programme for people from under-represented groups, reached 35,000

people in 34 countries and over 50% of them were women. In the

fiscal, we assessed and enhanced our programme controls to improve

programme quality, impact and reporting globally and fostered new

partnerships to increase employment rates upon graduation.

Where we provided Water Sanitation and Hygiene (WASH) to

communities in water-stressed markets, we partnered with leading

NGOs to ensure equal representation on WASH committees. These

committees facilitate community dialogues to tackle social norms that

prevent women’s equal access to and agency over WASH. This year

more than 50% of WASH committee members were women.

We continued to expand our inclusive approach to supporting

smallholder farmers in Kenya, Tanzania and Ghana, providing equal

access to agricultural training and resources for women, youth and

people with disabilities, building their economic and environmental

resilience and strengthening our supply chain.

Championing a diverse supply chain

In fiscal 25, we have grown our diverse supplier base across 28

countries, actively engaging with over 930 diverse suppliers, more than

60% of them being women-owned. We continue to champion inclusion

across our value chain, working with organisations like WEConnect

International and OutBritain, to identify, connect with and grow

diverse suppliers. This year, we also partnered with the World

Federation of Advertising to launch a supplier diversity playbook,

offering guidance for marketing leaders on inclusive procurement

strategies. More information can be found in our ESG Reporting Index.

Creating an inclusive and thriving hospitality industry

Through Diageo Bar Academy, we aim to foster a thriving and inclusive

hospitality sector that works for all. In fiscal 25, we continued to

provide highly accessible educational resources and training. Our

resources are designed to help hospitality workers meet guests'

expectations, upskill new hires and support their career progression

and wellbeing. We led dedicated training and mentoring sessions in

areas where we see opportunities to support women's advancement

within the hospitality sector.

Inclusive marketing: Good for society and good for business

We craft and market our products for everyone (Legal Drinking Age+)

and, through our advertising, we want our brands to reflect all

consumers around the world. As one of the world’s largest advertisers,

we’re committed to ensuring that everyone, from script to screen,

sees themselves represented, and we continue to play our role to make

mainstream media more inclusive. In fiscal 25, we made significant

advancements to improve the accessibility of our content, and

developed and scaled training for our marketing teams and agency

partners. We further embedded inclusion into our Guinness Six Nations

campaigns with expanded live audio description, sign language

commentary and additional in-stadium accessibility. This includes the

use of the ‘Field of Vision’ devices to enhance the live experience for

blind and visually impaired fans. With Guinness, we announced a

collaboration with IDA Sports to create the first-ever soft ground boot

engineered for female athletes. We also partnered with 'She Said So', a

non-profit organisation committed to gender equality within the music

industry. Johnnie Walker worked on the campaign 'Pass the Mic' with

WE ARE Pi, which celebrates female game changers in hip-hop.

	Louise Prashad Chief HR Officer
	We are proud of our progress over many decades in championing inclusion and diversity with our brands, communities and workforce, and we want to continue to build on our strong foundations.'

60 Diageo Form 20-F 2025

OUR ESG REPORTING APPROACH

Our ESG reporting approach

Reporting transparently on the ESG issues that affect our business, and that our business contributes to, plays a vital role in delivering our strategy.

It helps us to manage ESG risks, take opportunities and promote sustainable development everywhere we live, work, source and sell.

Our ESG reporting suite aims to provide comprehensive and comparable disclosures for a broad range of stakeholders. As well as publishing our

integrated Annual Report and ESG Reporting Index each year, we also submit non-financial information to benchmarking and index organisations,

including those listed on the Awards and ranking page of our website.

The non-financial reporting space is evolving quickly. We are committed to continually evaluating and improving our approach and to actively

tracking emerging ESG reporting regulations, frameworks and good practice. Since launching our ‘Spirit of Progress’ ESG action plan, we have set

out to help create a more inclusive and sustainable world, creating a positive impact in our company, and for our society.

How we report to our stakeholders – our reporting suite

Annual Report Where we present our most material disclosures and describe how our strategy delivers value for our business and other stakeholders. Performance against our most material targets is integrated into the relevant focus area sections.	ESG Reporting Index Where we provide additional disclosures in line with the GRI (Global Reporting Initiative) Standards, our materiality assessment and our response to the Sustainability Accounting Standards Board (SASB). We also consider the UNGC requirements in our ESG reporting.	Non-Financial Reporting Boundaries and Methodologies Where we provide information on the boundaries and calculations applied to derive information set out in the Annual Report and the ESG Reporting Index.	Diageo.com Where, through the ‘Spirit of Progress‘ section, we give more details of our approach and performance, with examples of our strategy in action.

Who are our stakeholders? Everyone who is affected by our business, and everyone who affects it, is a stakeholder. A detailed description of our

stakeholder engagement process is on pages 86-93 of this Annual Report.

This non-financial and sustainability information statement provided on pages 61-62 provides an overview of topics and related reporting references

in our external reporting as required by sections 414CA and 414CB of the Companies Act 2006.

61 Diageo Form 20-F 2025

Non-financial and sustainability information statement

Reporting requirement as per Companies Act 2006 414CA and 414CB	Focus area	Read more in Diageo's reports	Relevant policies, standards or documents	Page reference
Environmental matters
1(a) environmental matters (including the impact of the company’s business on the environment)	Pioneering grain to glass sustainability	•Doing business the right way, from grain to glass •Risk Management – Identifying climate risks and opportunities •Climate change resilience •Identifying and assessing our physical risks •Identifying and assessing our transition risks and opportunities •Summary of our most important climate risks and opportunities •Our strategy for grain-to-glass sustainability •How we have reported consistently with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)	•Global Environment Policy(1) •Sustainable Agriculture Guidelines(1) •Sustainable Packaging Commitments(1) •Partnering with Suppliers Standard(1) •Deforestation Guidelines(4) •Water Stewardship Strategy(4) •Reinventing Packaging Strategy(4)	p.36-37 p.46-57
Our people
1(b) the company’s employees	Our people and culture	•Highly engaged talent Growing our talent Continuing to evolve our culture Enabling our people to thrive Champion inclusion and diversity •Gender and ethnic representation of our leadership •Promoting inclusivity through our value chain •Championing a diverse supply chain •Inclusive marketing: Good for society and good for business	Code of Business Conduct(2) Great Britain/Scotland and Republic of Ireland Gender Pay Gap Report 2024(4) Global Human Rights Policy(1) Directors' Remuneration Policy(4) Board Diversity Policy(4)	p.40-41
	Champion inclusion and diversity			p.58-59
	Health and safety	•Embedding a culture of health and safety •Empowering responsibility: Fostering a safe work environment •Continuous improvement initiatives	•Global Health, Safety and Wellbeing Policy(1)	p.42-43
1(c) social matters	Promote positive drinking	•Education to tackle harmful drinking •Promoting moderation through aspiration and choice •Advocating improved laws and industry standards •Marketing in a responsible way	Global Marketing and Digital Marketing Policy(1) Global Employee Alcohol Policy(1)	p.44-45
Human rights
1(d) respect for human rights	Business integrity and Human rights	Standing up for human rights	•Global Human Rights Policy(1) •Modern Slavery Statement(3) •Global Brand Promoter Standard(1) •Privacy Policy(1)	p.38-39
Anti-bribery and corruption
1(e) anti-corruption and anti-bribery matters	Business integrity and Human rights, Doing business the right way	•Business integrity •Code of Business Conduct (Our Code) •Encouraging people to speak up •Managing third-party risks	•Code of Business Conduct(2) •Data Privacy Policy(4) •Global Information Management and Security Policy(4) •Countering Corruption Policy(1) •Competition and Antitrust Policy(1)	p.38-39

62 Diageo Form 20-F 2025

OUR ESG REPORTING APPROACH continued

Reporting requirement as per Companies Act 2006 414CA and 414CB	Focus area	Read more in Diageo's reports	Relevant policies, standards or documents	Page reference
Business model
2(a) a brief description of the company’s business model	Diageo's business model	•Strategic Report •Our principal risks and risk management •Stakeholder engagement		p1-15 p.63-71 p.86-93
Risk management
2(d) a description of the principal risks relating to the matters mentioned in subsection	Our principal risks and risk management	Effective risk management Our principal risks and risk management	•Risk Management Standard(4) Business Continuity Management Standard(4)	p.63-71
	Viability statement	Viability statement		p.72-73
Non-financial performance
2(e) a description of the non-financial key performance indicators relevant to the company’s business	Monitoring performance and progress	Non-financial performance ‘Spirit of Progress’ Key Sustainability Targets		p.18-19 p.36-60 p.51
Climate-related financial disclosures as required by sections 414CA and 414CB of the Companies Act 2006
(a) description of the company’s governance arrangements in relation to assessing and managing climate-related risks and opportunities;	Pioneering grain to glass sustainability	•Governance (Pioneering grain to glass sustainability)	See above, under Environmental matters	p.46
(b) a description of how the company identifies, assesses, and manages climate-related risks and opportunities;		•Risk Management – Identifying climate risks and opportunities		p.47-49
(c) a description of how processes for identifying, assessing, and managing climate-related risks are integrated into the company’s overall risk management process;		•Effective risk management •Risk Management – Identifying climate risks and opportunities		p.63-71 p.47-49
(d) a description of — (i) the principal climate-related risks and opportunities arising in connection with the company’s operations, and		•Effective risk management: •Risk Management – Identifying climate risks and opportunities		p.63-71 p.47-49
(d) a description of — (ii) the time periods by reference to which those risks and opportunities are assessed;		•Risk Management – Identifying climate risks and opportunities •Quantitative impact of transition risks and opportunities		p.47-49
(e) a description of the actual and potential impacts of the principal climate-related risks and opportunities on the company’s business model and strategy;		•Risk Management – Identifying climate risks and opportunities •Identifying and assessing our transitions risks and opportunities		p.47-49
(f) an analysis of the resilience of the company’s business model and strategy, taking into consideration different climate-related scenarios;		•Climate change resilience •Viability statement •Scenario analysis of physical and transition risks (in the Non- Financial Reporting Boundaries and Methodologies)		p.47-49  p.72-73 p.4-7
(g) a description of the targets used by the company to manage climate- related risks and to realise climate- related opportunities and of performance against those targets; and		•Our strategy for grain-to-glass sustainability •Key Sustainability Targets		p.50-56 p.51
(h) a description of the key performance indicators used to assess progress against targets used to manage climate-related risks and realise climate-related opportunities and of the calculations on which those key performance indicators are based		•Our strategy for grain-to-glass sustainability •Key Sustainability Targets		p.50-56 p.51

(1)https://www.diageo.com/en/our-business/corporate-governance/code-of-business-conduct/policies-and-standards

(2)https://www.diageo.com/en/our-business/corporate-governance/code-of-business-conduct

(3)https://www.diageo.com/en/esg/doing-business-the-right-way/modern-slavery-statement

(4)Externally published documents on different subsites

63 Diageo Form 20-F 2025

Risk factors

Investing in the securities of Diageo involves risk. Diageo believes the following to be the principal risks and uncertainties that are

most likely to have a material adverse impact on the Diageo group. These risks should be carefully considered together with other

information included elsewhere within this annual report. If any of these risks occur, either alone or in combination with other risks,

Diageo’s business, financial condition and performance could suffer and the trading price and liquidity of its securities could decline.

The order of presentation of the risk factors below does not necessarily indicate the likelihood of a particular risk’s occurrence or the

potential magnitude of its financial consequences.

In addition, because any global business of the kind Diageo is engaged in is inherently exposed to risks that become apparent only

with the benefit of hindsight, risks which Diageo does not currently deem to be material or of which it is not presently aware could

also materially and adversely impact Diageo’s business, financial condition and performance in future periods.

Risks related to the global economy

Diageo’s business has been and may, in the future, be adversely impacted by unfavourable economic, political, social or other

developments and risks (including those resulting from a public health threat, increases in geopolitical instability, including in

relation to Russia’s invasion of Ukraine and conflicts in the Middle East, tariffs and/or inflationary pressures) in the

countries in which it operates

Diageo’s products are sold in nearly 180 countries worldwide, and Diageo may be adversely affected by global economic volatility or

unfavourable economic developments in any of the countries or regions where it has distribution networks, marketing companies or

production facilities. In particular, Diageo’s business is dependent on general economic conditions in its major markets, which

include the United States, the United Kingdom, the countries that form the European Union, and certain countries within the Latin

American region, India and China, and failure to react quickly enough to changes in those economies could have an adverse effect on

financial performance.

The markets in which Diageo operates have been significantly impacted, and could be impacted in the future, by public health threats,

such as the Covid-19 pandemic. Similarly, Russia’s invasion of Ukraine and the ongoing conflicts in the Middle East have, among

other things, resulted in elevated geopolitical instability and economic volatility. The economic volatility attributable to these

conflicts is part of, and contributing to, a larger trend of rising costs of living, which has had and may continue to have a significant

adverse effect on economic activity that could have a material adverse impact on Diageo’s business, financial condition, results of

operations and/or the price of Diageo’s securities.

Any future significant deterioration in economic conditions globally or in any of Diageo’s key markets, including economic

slowdowns, global, regional or local recessions or depressions, currency instability, increased unemployment levels, new or increased

custom duties, tariffs and/or other tax rates, increased inflationary pressures and/or disruptions to credit and capital markets, could

lead to eroded consumer confidence and decreased consumer spending more generally, which in turn could reduce consumer demand

for Diageo’s products. Unfavourable economic conditions could also negatively impact Diageo’s customers, distributors, suppliers,

and financial counterparties, who may experience cash flow problems, increased credit defaults, decreases in disposable income or

other financial issues, which could lead to changes to ordinary customer stocking patterns, including destocking or stocking ahead of

potential price increases as well as an increase in Diageo’s bad debt expense. In addition, volatility in the capital and credit markets

caused by unfavourable economic developments and uncertainties, including the heightened geopolitical instability caused by

Russia’s invasion of Ukraine, the conflict in the Middle East, and/or inflationary pressures, could result in a reduction in the

availability of, or a further increase in the cost of, financing to Diageo.

64 Diageo Form 20-F 2025

Diageo’s business could also be affected by other economic developments such as fluctuations in currency exchange rates, the

imposition of any import, investment or currency restrictions (including the potential impact of any global, regional or local trade

wars or any tariffs, customs duties or other restrictions or barriers imposed on the import or export of goods between territories,

including but not limited to, imports into and exports from the United States, China, the United Kingdom and/or the European

Union), the imposition of economic or trade sanctions, or any restrictions on the repatriation of earnings and capital. For example, the

United States has announced and/or implemented significant new tariffs on imports into the United States, including a baseline 10%

tariff on most goods imported from most countries, which has prompted retaliatory tariffs by a number of countries (e.g. in March

2025, several Canadian provinces removed all American beverage alcohol from store shelves, in response to the United States

announcing a 25% tariff on goods imported from Canada). If maintained, the recently announced tariffs, and any tariffs to be

announced in the future by the United States, could result in further retaliatory measures and an escalation of trade disputes which

could pose a significant risk to Diageo’s business, including an increase to the cost of Diageo’s products and, to the extent Diageo

absorbs the costs of tariffs and does not pass them through to customers, higher cost of goods sold and decreased profit and margins.

The extent and duration of the tariffs and the resulting impact on general economic conditions and on Diageo’s business are uncertain

and depend on various factors, including negotiations between the United States and affected countries, the responses of other

countries or regions, deferments, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply,

and demand for Diageo’s product in affected markets. Further, actions Diageo takes to adapt to new tariffs or trade restrictions may

cause Diageo to modify operations or forgo business opportunities. Tariffs and import and export regulations could also limit the

availability of Diageo’s products, prompt consumers to seek alternative products and provide an opportunity for competitors not

subject to such tariffs to establish a presence in markets where Diageo conducts business.  Any of these developments may have a

material adverse effect on Diageo’s financial performance.

Diageo’s operations are also subject to a variety of other risks and uncertainties related to its global operations, including adverse

political, social or other developments. Political and/or social unrest or uncertainties, natural disasters, public health threats (including

the Covid-19 pandemic and any future epidemics or pandemics, and government responses thereto), politically- motivated violence

and terrorist threats and/or acts, including those which are specifically directed at the alcohol industry, may also occur in countries

where Diageo has operations. 

Many of the above risks are heightened, or occur more frequently, in emerging markets, such as Colombia, Kenya and Mexico. In

general, emerging markets are also exposed to relatively higher risks attributable to unstable governments, corruption, crime and lack

of law enforcement, undeveloped or biased legal systems, expropriation of assets, sovereign default, military conflicts, liquidity

constraints, inflation, devaluation, price volatility and currency convertibility issues, as well as other legal and regulatory risks and

uncertainties. Developments in emerging markets can affect Diageo’s ability to import or export products and to repatriate funds, as

well as impact levels of consumer demand (for example, in duty-free outlets at airports or in on-trade premises in affected regions)

and therefore Diageo’s levels of sales or profitability. Any of these factors may affect Diageo disproportionately or in a different

manner from its competitors, depending on Diageo’s specific exposure to any particular emerging market, and could have a material

adverse effect on Diageo’s business and financial results.

Climate change, or legal, regulatory or market measures to address climate change or other environmental concerns, may

negatively affect Diageo’s business or operations, and water scarcity or water quality issues could negatively impact Diageo’s

production costs and capacity

Climate change is occurring around the world as a result of carbon dioxide and other greenhouse gases in the atmosphere having an

adverse effect on global temperatures, weather patterns and the frequency and severity of extreme weather-related events and

disasters. To the extent that weather patterns and climate change, or legal, regulatory or market measures enacted to address such

climate change or other environmental concerns, have a negative effect on agricultural productivity in the various regions from which

Diageo procures its raw materials, Diageo may be subject to decreased availability of, or increased prices for, a number of raw

materials that are necessary in the production of Diageo’s products, including wheat, maize, barley, sugar cane/molasses, vanilla,

agave, rice, grapes, sorghum, and aniseed. Severe weather events or changes in the frequency or intensity of weather events could

also pose physical risks to Diageo’s production facilities, impair Diageo’s production operations or disrupt Diageo’s supply chain,

which may affect production operations, delivery of its products to customers and insurance costs and coverage. For example, a

number of Diageo’s distilleries in Scotland are in lower coastal areas and, as a result, may suffer disruption due to coastal flooding

and/or storms, such as Storm Eowyn which caused minor disruptions. Climate change and geographic limitations related to the

production may also expose Diageo to water scarcity and quality risks due to the water required to produce its products, including

water consumed in the agricultural supply chain. If climate change leads to droughts or water over-exploitation or has a negative

effect on water availability or quality in areas that are part of Diageo’s supply chain, the price of water may increase in certain areas

and certain jurisdictions may adopt regulations restricting the use of water or enact other unfavourable changes.

65 Diageo Form 20-F 2025

Water, which is the main ingredient in virtually all of Diageo’s products and a major component within its agricultural supply chain,

is also a limited resource in many parts of the world. As demand for water continues to increase, and as water becomes scarcer and

the quality of available water deteriorates, including as a result of climate change, Diageo may be affected by increased production

costs (including as a result of increases in certain water-related taxes or related regulations), capacity constraints, or requests to cease

production entirely in water-stressed areas, which in turn could adversely affect Diageo’s business, financial results and reputation. A

number of Diageo’s production sites are in water-stressed areas and may be exposed to potential disruption if demand for water

exceeds the available amount during a certain period or if the poor quality of available water restricts its use.

In addition, a failure by Diageo to respond appropriately to increased governmental or public pressure for further reductions in

greenhouse gas emissions, water usage and/or to address any other perceived environmental issues could damage Diageo's reputation.

Increased governmental or public pressure for further reductions in greenhouse gas emissions or water usage may also cause Diageo

to incur increased costs for energy, transportation and raw materials, as well as potentially require Diageo to make additional

investments in facilities and equipment, thus adversely impacting Diageo’s business and financial results. As governments and

business take action to reduce or mitigate the effects of climate change, Diageo and its supply chain are expected to incur increased

costs, including those associated with required improvements to energy usage in agriculture and glass manufacturing, water

efficiency and usage, land practices and competition for land from food crops, the rising cost of natural gas and rising worldwide

carbon prices. It is possible these costs increase beyond what is currently expected or that other categories of costs increase

unexpectedly, either or both of which could have an adverse impact on Diageo’s financial results.

Diageo is also required to report greenhouse gas emissions, energy usage data and related environmental information to a variety of

entities, and comply with the European Union Emissions Trading Scheme. Regulators in various jurisdictions, including Europe, the

United States and the United Kingdom, have focused efforts on increased disclosures related to ESG matters, including climate

change and mitigation efforts. These regulations, in particular the Corporate Sustainability Reporting Directive and the Corporate

Sustainability Due Diligence Directive, have expanded the nature, scope and complexity of matters that companies are required to

control, assess and report. This will require Diageo to make additional investments and implement new practices and reporting

processes, and will entail additional compliance risk. Disparate and evolving standards for identifying, measuring and reporting ESG

metrics, including ESG-related disclosures that may be required by the UK Financial Conduct Authority, US and European regulators

and other regulatory bodies, will likely increase compliance burdens and associated regulatory and reporting costs and complexity

significantly. Furthermore, while ESG reporting has improved, data remains of limited quality and consistency and is more uncertain

than historical financial information. ESG data, methodologies and standards may evolve over time in line with market practice,

regulation, or owing to scientific developments. The use of inconsistent or incomplete data and models could result in sub-optimal

decision making. If Diageo is unable to accurately measure and disclose required data in a timely manner, it could be subject to

penalties in certain jurisdictions.

Diageo’s operations are also subject to environmental regulations by national, regional and local agencies, including, in certain cases,

regulations that impose liability without regard to fault. These regulations can result in liability that might adversely affect Diageo’s

operations and financial condition. As regulators in Diageo’s markets continue to respond to rising concerns about the impact of

climate change and other environmental threats, regulation and enforcement is becoming stricter. There can be no assurance that

Diageo will not incur a substantial liability or that applicable laws and regulations will not change or become more stringent in the

future.

Risks related to Diageo’s industry

Demand for Diageo’s products may be adversely affected by many factors, including disruptive market forces, changes in

consumer preferences and tastes and the adverse impacts of declining economies

Diageo’s portfolio of brands includes some of the world’s leading beverage alcohol brands, as well as a number of brands that are

prominent in certain regional and/or country-specific markets. Any inability by Diageo to respond and adapt either its products or its

processes to disruptive market forces, including e-commerce, artificial intelligence, digital, and new formats, could impact Diageo’s

ability to effectively service its customers and consumers with the required agility, thereby threatening market share, revenue,

profitability and growth ambitions. While Diageo is focused on expanding its digital platforms and effectively using technology in its

supply chains, there is no guarantee that these efforts will help Diageo gain and/or maintain a competitive advantage over its peers.

66 Diageo Form 20-F 2025

Consumer preferences on a global, regional and/or local scale may shift due to a variety of factors, including changes in

demographics, evolving social trends (including any shifts in consumer tastes towards at-home consumption occasions,

premiumisation, small-batch craft alcohol, lower or no alcohol beverages, THC and hemp-based THC beverages or other alternative

products), increased use of GLP-1 medications (which may have the effect of reducing alcohol consumption in certain customers),

changes in travel, holiday or leisure activity patterns, weather conditions, public health regulations and/or health and wellness

concerns, any or all of which may reduce consumers’ willingness to purchase beverage alcohol products from large producers such as

Diageo or at all. There is also a risk to Diageo’s brands emerging from consumers making brand choices that reflect their increasingly

polarised socio- political views, including with respect to ESG matters. The market share, profitability and growth ambitions of

Diageo’s brands, as well as Diageo’s reputation more generally, could also be adversely affected by any failure by Diageo to service

its customers and consumers with the required agility or to provide consistent, reliable quality in its products or in its service levels to

customers.

Economic pressures in the markets Diageo serves may also reduce consumer demand for Diageo’s products. In particular, rising costs

of living have negatively impacted the spending habits of consumers in various markets which Diageo serves and have caused some

consumers to choose products which have lower price points, including those of Diageo’s competitors. Changes in consumers’

spending habits due to rising costs of living have had and may continue to have an adverse effect on Diageo’s business and financial

results.

In addition, the social acceptability of Diageo’s products may decline due to regulatory action, negative publicity surrounding, and/

or public concerns about, alcohol consumption. For example, a number of jurisdictions, such as Canada and the United States, are

updating their guidance around alcohol. Such anti-alcohol publicity or sentiment could also result in regulatory action, litigation or

customer complaints against companies in the beverage alcohol industry and have an adverse effect on Diageo’s business and

financial results.

Diageo’s business has historically benefitted from the launch of new-to-world products or variants of existing brands (with recent

examples including premium ready-to-serve cocktails, such as The Cocktail Collection, and Johnnie Walker Black Ruby), and

continuing product innovation and the creation of extensions to existing brands remain significant elements of Diageo’s growth plans.

The launch and ongoing success of new-to-world products or global brand extensions is inherently uncertain, especially with respect

to such products’ initial and continuing appeal to consumers. Similarly, brands or ventures that Diageo acquires may not deliver the

expected benefits and/or may not scale as expected. The failure to successfully launch a new product or an extension of an existing

brand, or to maintain the product’s initial popularity, can give rise to inventory write-offs and other costs, as well as negatively

impact the consumer perception of and thus the growth of an existing brand. There can be no assurance of Diageo’s continuing ability

to develop and launch successful new products or variants of existing products, or to ensure or extend the profitable lifespan of its

existing products.

Diageo is subject to tax uncertainties, including changes in tax obligations, tax laws, regulations and interpretations, as well

as enforcement actions by tax authorities

Changes in the political and economic climate have resulted in an increased focus on tax collection in recent years, leading to greater

uncertainty for multinational companies such as Diageo. In recent years, tax authorities have shown an increased appetite to

challenge the methodology used by multinational enterprises, even where a company complies with international best practice

guidelines. Changes in tax law (including tax rates), tax treaties, accounting policies and accounting standards, including as a result of

the Organisation for Economic Co-operation and Development’s review of base erosion and profit shifting and the European Union’s

anti-tax abuse measures, combined with increased investments by governments in the digitisation of tax administration, could also

result in increased levels of audit activity, investigations, litigation or other actions by relevant tax authorities and increased

complexity of data requirements and compliance processes. Diageo also operates in a large number of jurisdictions with complex tax

and legislative regimes and whose related laws and regulations are open to subjective interpretation. These countries include Brazil,

India and countries in East Africa, where Diageo is currently involved in a large number of tax cases, including some cases that could

potentially create significant exposures or liability for Diageo. Diageo may be subject to further future tax assessments in these

jurisdictions based on the same or similar matters.

Assessing the potential financial exposure arising from these and other cases is particularly challenging due to the uncertain fiscal and

political environment in these jurisdictions. Any such investigations, litigation or other actions may result in damages, penalties or

fines as well as reputational damage to Diageo or its brands, and as a result, adversely impact Diageo’s business and financial results.

For additional information with respect to legal proceedings, including potential tax liabilities in Brazil and India, see note 19 to the

consolidated financial statements.

Beverage alcohol products are also subject to national excise taxes, import duties, sales or value-added taxes and other types of direct

and indirect taxes in most countries around the world, most of which are specific to individual jurisdictions. Increases in any such

taxes, or the imposition of new taxes, have had and could continue to have a material adverse impact on Diageo’s revenue from sales

or its margin, either through reducing the overall level of beverage alcohol consumption, having a disproportionate impact on certain

categories and/or by encouraging consumers to switch to lower-taxed categories of beverage alcohol.

67 Diageo Form 20-F 2025

In addition to the above, other significant changes in tax law, tax treaties, related accounting policies and accounting standards could

also increase Diageo’s cost of doing business and lead to a rise in Diageo’s effective tax rate and/or unexpected tax exposures, thus

adversely affecting Diageo’s business and financial results.

Any increases in the cost of production could affect Diageo’s profitability, including increases in the cost of commodities,

labour and/or energy due to inflation

The components that Diageo uses for the production of its beverage alcohol products are largely commodities purchased from

suppliers which are subject to price volatility caused by factors outside of Diageo’s control, including, inflation, changes in global

and regional supply and demand, weather and/or agricultural conditions, fluctuations in relevant exchange rates and/or governmental

controls. Fluctuations in the prices of various commodities, including energy prices, may result in unexpected increases in the cost of

the raw materials Diageo uses in the production of its products, including the prices of the agricultural commodities, flavourings and

other raw materials necessary for Diageo to produce its various beverages, as well as glass bottles and other packaging materials, thus

increasing Diageo’s production costs.

Diageo may also be adversely affected by shortages of any such materials, by increases in energy costs resulting in higher

transportation, freight or other related operating costs, or by inflation in any of the jurisdictions in which it produces its products.

Diageo may not be able to increase its prices or create sufficient efficiencies to offset these increased costs without suffering reduced

volumes of products sold and/or decreased operating profit.

While Diageo continues to closely monitor its operating environment, it is possible that the ongoing volatility related to significant

cost inflation along with a potential weakening of consumer spending power may have an adverse effect on Diageo’s business

financial condition and results of operations.

Diageo is subject to litigation specifically directed at the beverage alcohol industry, as well as to other litigation

Diageo and other companies operating in the beverage alcohol industry are, from time to time, exposed to class action or other private

or governmental litigation and claims relating to product liability, alcohol marketing, advertising or distribution practices, alcohol

abuse problems or other health consequences arising from the consumption or misuse of alcohol, including underage drinking.

Diageo may also be subject to litigation arising from legacy and discontinued activities, as well as other litigation in the ordinary

course of its operations, including in connection with commercial disputes and the acquisition or disposal of businesses or other

assets. Diageo is further subject to the risk of litigation, enforcement or other regulatory actions by tax, customs, competition,

environmental, anti-corruption and other relevant regulatory authorities, including with respect to the methodology for assessing

importation value, transfer pricing or compliance matters. Diageo’s listing in the United States may also expose it to a higher risk of

securities-related class action suits, particularly following any significant decline in the price of Diageo’s securities. Any such

litigation or other actions may be expensive to defend and result in damages, penalties or fines as well as reputational damage to

Diageo or its brands, and/or impact the ability of management to focus on other business matters, and may adversely affect Diageo’s

business and financial results. For additional information with respect to legal proceedings, see note 19 to the consolidated financial

statements.

Risks related to regulation

Regulatory decisions and changes in the legal, and regulatory environment could increase Diageo’s costs and liabilities or

limit its business activities

Diageo’s operations are subject to extensive regulatory requirements relating to production, distribution, importation, marketing,

advertising, sales, pricing, labelling, packaging, product liability, antitrust,