Diageo probed over ‘inflated sales’

Drinks giant Diageo is being probed in the US for allegedly artificially inflating its sales by sending more cases of alcohol to clients than required.

As reported by The Wall Street Journal, the Securities and Exchange Commission in the US is investigating how the company shipped stock to its distributors.

“Diageo is working to respond fully to the SEC’s requests for information in this matter,” a company spokeswoman told The Wall Street Journal.

Diageo’s American depositary receipts fell 5% on Thursday afternoon following the news. The US accounts for a third of the UK-based company’s sales and 45% of its profits, with Diageo holding a 20% share of the North American spirits market.

The news comes at a tumultuous time for the company, which owns Johnnie Walker, Smirnoff, Tanqueray and Guinness, among other brands.

Earlier this week we reported that Ravi Rajagopal, Diageo’s global head of business development, is to leave the company at the end of September – the third executive level departure to be announced in the last month.

The company announced in June that North American President Larry Schwartz will retire by the end of the year.

Diageo has delivered a sluggish performance in the US of late, with both Smirnoff and Captain Morgan experiencing a dip in sales.