World's largest liquor maker says Red Sea disruption is delaying its shipments

Diageo (DGE.L), a global spirits company, has announced on Tuesday that it is experiencing shipping delays for certain of its products as a result of attacks on vessels in the Red Sea. As a precaution, the company has put in place backup plans. The shortest sea route between Asia and Europe, the Suez Canal, has seen significant disruptions to shipping in recent months due to attacks by Houthi rebels, who are backed by Iran, in the vital Red Sea shipping lane. Diageo, the largest spirits manufacturer in the world, exports goods all over the world, including whisky made only in Scotland (Johnnie Walker) and tequila made in Mexico. Chandrashekar - speaking as the group released first-half results that failed to cheers investors, sparking a more than 4% drop in its shares - told Reuters shipments of products like Scotch to Asia were facing delays as vessels re-route to avoid the Red Sea. She did not say whether this would have any impact on the company’s outlook for this year, but said Diageo already had additional inventory in different regions, with a hub in China, for instance, holding stock to act as a buffer in emergencies for Asian markets. “We always have safety stocks… we live in a volatile world and even if it’s not geopolitical incidents, things can go wrong,” she said, adding Diageo had invested to ensure it could react in such a scenario. The company was reassessing its levels of safety stock following disruptions in the Red Sea and was planning to hold a higher number of days of stock where required, she continued. Diageo has previously said that trading in some markets in the Middle East had effectively ceased following Hamas’ October attack on Israel and the subsequent conflict. Chandrashekar and CEO Debra Crew said on Tuesday that distributors in some markets in the region had essentially stopped making orders following the attack. The situation remains “far from normal”, Crew added. The main impact was in Lebanon, another big Scotch market, Chandrashekar said, where people were going out socialising and celebrating less. More broadly, the conflict had affected sentiment across the region, she added. (with inputs from Reuters)