Interim Results - 6 Months to 31 Dec 1999, Part 1

Diageo PLC
23 February 2000


PART 1


                               INTERIM STATEMENT

Diageo, the international food and drinks company, today announced its interim
results for the six months ended 31 December 1999.


                                 6 months to  6 months to Dec
                                      Dec 99               98
Turnover                     £ 6,596 million   £6,267 million
Operating profit*             £1,151 million   £1,099 million
EPS*                              22.6 pence       20.5 pence
                                                             
*pre exceptional items and 
goodwill amortisation



                             OPERATING HIGHLIGHTS
                   for the six months ended 31 December 1999
                                       
Percentage movements given below and in the Group CEO's comments for turnover,
operating  profit  and marketing expenditure are organic movements  (at  level
exchange  and  after adjusting for acquisitions and disposals).  They  include
merger   cost  savings  achieved  in  the  period  and  are  before   goodwill
amortisation  and  exceptional items.  Comparisons  are  with  the  equivalent
period last year.

Diageo

Turnover up 7%
Marketing spend up 13%
Operating profit growth 10%
Operating margin up 0.3 percentage points to 17.4%
Additional merger cost savings of £40 million
Profit before goodwill amortisation, exceptional items and tax £1,087 million
£68 million underlying improvement in economic profit
Basic EPS excluding goodwill amortisation and exceptional items up 10% to 22.6
pence
Interim dividend 8.4 pence per share, up 8%
Free cash flow £416 million after merger integration spend of £53 million

Spirits and Wine

Volume up 6%
Volume of nine global priority brands up 9%
Turnover up 11%
Marketing expenditure up 14%
Marketing expenditure up 22% on the nine global priority brands
Operating  profit growth 14% to £614 million, Europe up 15%, North America  up
12%, Asia Pacific up 31%, Latin America down 4% and Rest of World up 36%
Operating margin up 0.5 percentage points to 21.3%

Note:    Volume includes Ready-to-Drink brands at equivalent units (one-tenth
of  case  volume).   Volume of the global priority brands  excludes  Ready-to-
Drink.

Packaged Food

Volume up 4%
Turnover up 5%
Marketing expenditure up 15%
Operating profit level at £271 million
Operating margin down 0.6 percentage points to 13.2%

Beer

Total volume up 1%, with Guinness volume up 2%
Turnover up 1%
Marketing expenditure up 11%
Operating profit growth 14% to £161 million
Operating margin up 1.3 percentage points to 13.5%

Quick Service Restaurants

Dollar system sales up 6%
Total restaurants up 6% compared with 31 December 1998 to 10,850 units
Worldwide comparable restaurant sales up 0.4%
Operating profit growth 5% to £105 million
Operating margin up 0.3 percentage points to 22.4%


GROUP CHIEF EXECUTIVE'S COMMENTS

John  McGrath, Group Chief Executive of Diageo, commenting on the  six  months
ended 31 December 1999 said:

'In  September 1999, I said that profitable top line growth would be  the  key
contributor to delivering our shareholder value objective and we have achieved
profitable  top line growth in this period.  Turnover is up 7%  and  operating
profit  is  up 10% overall.  To continue this momentum, we have increased  the
marketing spend behind Diageo's brands by 13% in the period which will further
strengthen their leadership positions and drive shareholder value.

In  our  Spirits  and  Wine business, we have created  a  new  model  for  the
industry.   We  are focused on those markets with the greatest  potential  for
economic  profit  improvement.  We have created for each of  these  markets  a
brand  portfolio which will ensure that we capture the largest share  of  that
potential.  These results demonstrate that our strategy is being well executed
and will drive substantial value in the future.  The Spirits and Wine business
has  delivered  on  all fronts: top line growth of 11% driven  by  an  overall
volume  increase of 6%; margin improvement of 0.5 percentage points; operating
profit  improvement  of 14%.  Our major markets of North  America  and  Europe
generated  considerable  operating profit growth  and  accounted  for  70%  of
operating profit improvement.  Similarly our strongest brands, the nine global
priority  brands, grew substantially and contributed over half of the  overall
improvement.    However,  growth  is  now  being  achieved  more  consistently
throughout the spirits portfolio and in more markets throughout the world.  We
are  confident  that the strength of our Spirits and Wine business,  with  its
leadership  positions  in  all major markets and with  its  pre-eminent  brand
portfolio,  will continue to deliver growth and generate high levels  of  cash
going forward.

In  Packaged Food, top line growth of 5% was achieved in the period.  However,
marketing spend was increased by 15% and therefore operating profit was  flat.
Performance  has  been  mixed  between categories.  Foodservice  continues  to
perform  strongly.  The acquisitions we made last year have been  successfully
integrated,  operating  margins have improved and strong  organic  growth  has
again  been  achieved  in  the  period.   In  Refrigerated  Baked  Goods,  mix
improvement  continued but market share has fallen as low value products  such
as  Regular Biscuits declined further and turnover was flat.  In the Ready-to-
Serve  Soup  and  Pizza and Hot Snacks categories our Progresso  and  Totino's
brands  continue  to grow strongly at both the top and the  bottom  line.   In
other  categories  significant incremental marketing spend has  driven  volume
growth  for  the  Green Giant and Pillsbury brands.  However,  the  amount  of
incremental  volume achieved was below our expectations and operating  margins
fell.   In  the second half, we are reducing promotional spend in lower  value
product  categories  which will impact volume growth in the  second  half  for
Pillsbury North America.

In  Beer,  this  has  been another period of strong operating  profit  growth,
amounting to 14%.  The Guinness brand continues to deliver volume growth  with
a  2%  increase despite a slow start in Ireland.  Our decision to reduce stock
levels  in  the  United  States  as  part  of  a  programme  of  supply  chain
improvements in Beer, also had an adverse impact on shipments while depletions
were up 10%.  In Great Britain, the Guinness brand has achieved further market
share  gains  and  volume growth was driven by excellent  marketing  campaigns
particularly around the Rugby World Cup.  We continue to invest in  the  brand
throughout the world and marketing spend increased further as a percentage  of
sales to 10.4%.  Overheads have been reduced and operating margin has risen by
1.3  percentage points.  The strength of the Guinness brand together with  the
opportunity  which exists to reduce the cost structure of our Beer operations,
will result in margin improvement and enable strong operating profit growth to
be delivered.

Quick  Service Restaurants system sales increased as the number of restaurants
increased  by  324  in  the period.  Despite a slow start  to  the  year  with
negative comparable restaurant sales (comps) in the United States in the first
quarter, momentum began to build in the second quarter when comps were up  4%.
For the six months, worldwide comps were up 0.4%.  Operating profit growth was
5%  despite  an  expansion  of  the organisation  in  Europe  which  increased
overheads.   This expansion will provide the base for further  growth  of  the
system  in  Europe.   In the United States, the new restaurant  transformation
programme  continues  to  produce sales growth in the test  restaurants  which
exceed  our expectations.  These new ways of delivering the Burger King  brand
to  consumers  will  be  the key to the future growth  of  our  Quick  Service
Restaurant  business.  These  new formats will  build  on  an  already  strong
consumer  franchise as the Burger King brand remains the consumers'  favourite
choice for hamburgers in the United States.  Further improvement in the United
States  and  continued profitable expansion of the system outside  the  United
States will be key to profitable growth of our QSR operations.

Commenting on the outlook for the full year John McGrath said:

'In  Spirits  and Wine, there will be further price increases  in  the  second
half, particularly on selected global priority brands and this is expected  to
have  some  impact  on  volume.  However, this more favourable  price  impact,
together  with further strong mix improvement, mean that we will  continue  to
deliver  strong turnover and operating profit growth.  In Packaged  Food,  the
tough  competitive environment we face in the United States will  continue  to
impact performance in Pillsbury North America in the second half, although  we
expect  strong growth in our Foodservice business and improved performance  in
International to result in modest total operating profit growth for  the  full
year.   In  Beer,  growth  of the Guinness brand and margin  improvement  will
continue.  In Quick Service Restaurants, we believe that international  growth
and  further improved performance in the United States will deliver a stronger
second half performance.'

Sir Anthony Greener, Chairman, commented:

'In this period we have built upon the achievements of the second half of last
year  and these results demonstrate a high level of overall performance.   The
merger  that  we completed two years ago was designed to create  a  major  new
force in branded food and drink, operating on a truly international scale  and
achieving  significantly  higher  rates  of  topline  growth  than   its   two
predecessor  companies.   This we are now achieving. These  results  show  the
value  creating power of Diageo and going forward we are confident that Diageo
can  continue  to deliver overall levels of topline and operating  performance
similar to our achievements in the first six months.'


The detailed interim statement follows.


                        OPERATING AND FINANCIAL REVIEW
                   for the six months ended 31 December 1999
  References to percentage movements are on reported figures unless otherwise
                                    stated

SPIRITS AND WINE

Turnover increased 11% on an organic basis.

Turnover  was  £2,877  million  (1998 - £2,732 million)  an  increase  of  5%.
Organic  growth of 11% offset a £139 million reduction due to brand  disposals
made since the beginning of the prior year.

Organic volume growth was 6% with growth 
throughout the spirits portfolio.

Organic  volume growth was 6% driven by growth in total spirits volume,  which
was up 8% while wine volume was down 7%.  The spirits portfolio is now managed
as  three  categories and the relative importance of each  category  is  shown
below:
                                                     Volume    Share of
                                                     growth       total
                                                                 volume
                                                          %           %
9 Global priority brands                                  9          50
35 Local priority brand market units                     13          14
Niche spirits brands                                      5          17
Disposal brands (sold in the period)                   (17)           4
Total spirits                                             8          85
Wine                                                    (7)          15
Total Spirits and Wine volume                             6         100

Mix and price improvements have contributed 
5 percentage points of the organic
growth in turnover.

There  has been significant mix improvement in the period as a result  of  the
strong  volume  growth  in  the  global  priority  brands.  Focused  marketing
investment has strengthened the market position of the leading brands and  has
improved the ability to achieve price increases.

Marketing spend increased 14% on an organic basis.

Investment  in  marketing was up 10% to £369 million (1998  -  £334  million).
Marketing spend on the global priority brands now represents 69% of total  UDV
spend, up 7 percentage points over the comparable period.  Marketing spend  on
other  spirits  brands was in line with the prior period while spend  on  wine
brands was down 9%.

Operating profit increased 14% on an organic basis.

Operating  profit was £614 million (1998 - £589 million) an  increase  of  4%.
Organic  growth  of  14%  was  partly offset by a  £36  million  reduction  in
operating profit due to brand disposals made since the beginning of the  prior
year.  Excluding merger synergy, organic operating profit growth was 7%.

The  performance  of  the  nine global priority 
brands  continues  to  improve strongly.

The performance of the nine global priority brands has strengthened further in
the  period  on all measures including volume up 9% and sales  up  15%.   This
improvement  in  performance was across all regions except in  Latin  America.
Investment  in  marketing behind these brands grew 22% and contribution  after
marketing spend grew 11%.  Further price increases were achieved in the period
and  these, together with the benefits of price increases implemented  in  the
prior  year, have led to significant growth in net sales (i.e. sales excluding
excise duty) as the chart below shows.  Performance in the period against  the
comparable period was as follows:
                                                     Volume   Net sales
                                                     growth      growth
                                                          %           %
Johnnie Walker Black and Deluxe                          11          13
Johnnie Walker Red                                       11          10
Smirnoff                                                  7          15
J&B                                                       3           7
Baileys                                                  15          20
Cuervo                                                   17          22
Gordon's                                                 13          14
Tanqueray                                                 4           4
Malibu                                                   13          17

The  performance  of  the  ten  leading 
brand market  units  (BMUs)  was  also
stronger.

In  total,  volume of the ten leading brand market units was up  10%  and  net
sales were up 14%. The improvement was as follows:
                                                     Volume   Net sales
                                                     growth      growth
                                                          %           %
J&B Rare in Spain                                        10          13
Smirnoff Red in the United States                         6          17
Cuervo in the United States                              20          23
Smirnoff Red in the United Kingdom                       21          20
Baileys in the United States                             11           8
Tanqueray in the United States                            1           3
Johnnie Walker Black in the United States                 9          13
Johnnie Walker Red in the United States                 (1)           -
J&B in the United States                               (18)        (15)
Baileys in the United Kingdom                            32          31

These  ten  BMUs  now represent 18% of Spirits and Wine total volume,  21%  of
total  net  sales  and 25% of contribution after marketing  spend.   Marketing
spend on the leading ten BMUs was up 28%.

In  North  America, strong performance from 
the leading brands  delivered  12%
organic operating profit growth.

The new structure in North America, with six regional marketing companies, has
continued to deliver improved performance in the period and the leading brands
continue  to  strengthen in terms of relative market position.  Organic  sales
growth  was  9%,  although  sales decreased by 1%  due  mainly  to  disposals.
Organic volume growth was 4% in total.  Spirits volume was up 9% driven by  9%
volume  growth in the nine global priority brands.  This was in  part  due  to
distributors'  decisions  to hold higher stocks in anticipation  of  scheduled
price  rises.   Price increases and mix improvements delivered  a  further  7%
growth  in net sales.  Investment in marketing was up 10% on an organic  basis
and  spend  increased  by  9% on the nine global priority  brands.   Operating
profit increased 12% on an organic basis.

Smirnoff,  Johnnie  Walker Red and Black, and Baileys all grew  market  share,
while  the remaining priority brands maintained their leadership positions  in
their categories.

UK performance was driven by new products 
and the millennium.

Volume  in  the  United  Kingdom was up 23% in  the  period.   The  millennium
celebrations encouraged retailers to hold higher stocks of premium spirits  to
meet  an  anticipated  increase  in consumer demand.   This  increased  demand
benefited  total depletions by approximately 300,000 cases.   In  addition  to
strong  performances from Smirnoff and Baileys, volume of Gordon's  and  Bells
were  up.   Market  share in the off trade increased and the on  trade  growth
continued, led by the successful introduction of Smirnoff Ice.

Successful  marketing campaigns continued to 
deliver growth  in  all  priority
brands in Spain.

In Spain, focused marketing investment continues to deliver growth in J&B with
volumes up 10%, net sales up 13% and improved market share.  Volume trends for
Baileys,  Smirnoff,  Malibu  and  Johnnie  Walker  Red  are  also  strong  and
successful advertising campaigns are supporting price increases of between  5%
and 8%.

The withdrawal of European Duty Free 
reduced overall volume by 1%.

The  withdrawal  of  European Duty Free in July  1999  is  estimated  to  have
resulted  in  a net reduction of 800,000 cases, of which half related  to  the
global priority brands, and a £10 million reduction in operating profit.

In Asia Pacific, the market in premium spirits 
has improved significantly.

Strong volume organic growth in Johnnie Walker Black Label and Dimple has  led
to improved operating margins and an organic increase of over 30% in operating
profit.   In  Thailand, Johnnie Walker Black Label led the growth  in  premium
spirits  and  volume grew 14%.  Volume of lower margin Spey Royal and  related
brands  was up over 50%.  In Korea, Dimple volume grew 137%.  Depletions  rose
nearly  70%  and market share increased.  In Taiwan, volume of Johnnie  Walker
Black  Label  and  Deluxe labels grew by 12% overall.  In  Japan,  the  Scotch
market  remains in decline but Old Parr outperformed the market while  Johnnie
Walker  Black  Label  maintained  its position.   A  substantial  increase  in
marketing  investment in Australia, particularly behind Smirnoff and  Baileys,
was  not  fully matched by short term volume returns and as a result operating
profit was lower.

In  Latin America, turnover declined by 6% 
and operating profit declined by 4%
on an organic basis.

Trading  conditions were difficult as a result of economic recession  in  most
markets and the natural disaster in Venezuela at the end of the year.  Despite
this,  however,  brands such as Johnnie Walker, Baileys and  Buchanans  Deluxe
gained  market share in most markets and reinforced their position as category
leaders.   In Brazil, the global priority brands of Johnnie Walker  Black  and
Red  Label  and  Smirnoff  all showed share gains  despite  significant  price
increases.

In the Rest of the World, organic operating 
profit increased by 36% as margins improved.

In the Rest of the World, turnover grew 7% and operating profit grew 36% on an
organic basis.  Margins improved driven by volume increases of leading  brands
such as Johnnie Walker Red and Black, Baileys and Gordon's in markets such  as
South  Africa and Kenya.  In Russia, lower costs relating to debtors and stock
write-offs also benefited reported profits in the period.

While total wine volume was down, premium brands grew.

While  premium wines, such as the Beaulieu Vineyard brand, where volumes  were
up 44%, have continued to perform strongly, lower price wines have lost volume
in  the  period both in the United States and Japan.  Changes in  distribution
are  proposed and wine brands in this category will be relaunched  to  address
this volume decline.

PACKAGED FOOD

Turnover increased 5% on an organic
basis driven by volume growth of 4%.

Turnover was £2,056 million (1998 - £1,926 million).  The disposal of non-core
brands in the last financial year and the formation of the joint venture  with
Nestle,  for Haagen-Dazs in the United States resulted in a decline in
turnover of  £101  million  while the acquisitions made in Foodservice
businesses  last year increased turnover in the period by £104 million.

Operating profit was flat on an organic basis 
as marketing spend increased  by 15%.

Operating profit was £271 million (1998 - £263 million) an increase of 3%.  On
an organic basis operating profit was flat as marketing spend increased by 15%
to  £424  million  (1998 - £368 million).   90% of this  increased  spend  was
behind Pillsbury North America brands.

Focus on higher margin products continued in 
Refrigerated Baked Goods.

For  Refrigerated Baked Goods, volume growth was 1% while sales were  flat  as
prices  were adjusted on selected product lines to protect share. Gross margin
improved due to lower raw material costs but operating profit was up  only  1%
as a result of an 11% increase in marketing spend. Focus remains on the higher
margin  products within the category. Volume decline has continued in the  low
margin  categories and this reduced market share in the period. Going  forward
low margin items will be replaced with fast moving, higher margin products and
therefore market share is expected to be maintained.

Progresso's  performance provides a model for 
delivering profitable  top  line growth.

Progresso  Soup continues to perform strongly. Effective advertising continues
to  drive  consumer takeaway, which is ahead of the category.  Similarly,  the
Totino's  pizza  brand has also performed well.  Volume  and  sales  for  both
brands  are  up approximately 10% and this has driven strong operating  profit
growth.

Volume performance in low margin categories improved.

In  Desserts  and  Specialty Products, which had faced  a  strong  competitive
environment in the prior financial year, incremental promotional spend has now
delivered  improved top line performance. Volume, sales and market share  were
up  but operating profit improved only slightly.  Similarly, canned vegetables
has  improved in volume terms driven by higher promotional spend. However, the
volume  growth was below expectations and in this low margin category,  higher
spend has adversely impacted profit.

Performance  of new products in the Frozen 
Breakfast category is  expected  to
provide future growth.

In  Frozen Breakfast, the overall category declined and although market  share
was  increased,  volume  declined  3%.  However,  mix  improved  and  turnover
declined  by  only  1%. Within the category, higher margin products  performed
well  but  gains in Toaster Pastries, where consumer takeaway was up  by  10%,
were  offset  by  declines  in lower margin segments  such  as  waffles  where
consumer  takeaway  was down by 16%.  Operating profit  fell  therefore  as  a
result  of this lower volume, increases in overheads as capacity was increased
and  a  24%  increase  in advertising spend behind new product  introductions.
Future  growth  in  Frozen Breakfast will be driven by the  roll  out  of  new
products which build upon an already proven format.

Green Giant Create-A-Meal! was affected by 
a change in consumer demands.

In Green Giant Frozen, total volume and sales were down about 8% due mainly to
declines  in  Green  Giant Create-A-Meal!  Competition  in  this  segment  has
increased  from  new  products which include meat.  Going forward,  the  Green
Giant  brand  in the meal category can be expanded from its current  vegetable
based offerings to respond to this competition.

The Mexican category has remained competitive.

Old  El  Paso,  which  is  a key profit generator has improved  profitability.
Overall  market share declined due to intense competition in sauces,  however,
reduced  package sizes in sauces delivered margin improvement in this product.
The  brand  is being repositioned in the Mexican Meals category in preparation
for  the  launch of new products.  The first of these was launched in  January
and generated high levels of trade acceptance.

Foodservice  continues  to perform strongly 
and now  represents  over  20%  of
operating profit.

Pillsbury Bakeries and Foodservice continues to expand profitably.  The  Heinz
and  Hazelwood  acquisitions last year have been successfully  integrated  and
costs  have been reduced, resulting in margin improvement of over 2 percentage
points.  Volume was up over 40% reflecting the benefit of the acquisitions and
further strong levels of organic growth.  Turnover on an organic basis grew 6%
and organic operating profit grew significantly.

Topline growth in International continues 
despite tough trading activities  in
many areas.

In  International, on an organic basis, volume grew 1% and turnover  grew  4%.
Continued softness in Latin America and higher marketing spend to drive growth
in other regions has lowered profits.  Strong topline results were achieved in
Asia  Pacific  and Europe, where organic volume has increased by  5%  and  4%,
respectively.

The  Haagen-Dazs business was transferred 
to the joint venture with Nestle, in October.

In the first quarter Haagen-Dazs volume was down 2% as a result of declines in
Novelties, Yogurt and Sorbet, although the core superpremium ice cream segment
continued  to perform strongly.  Since the formation of Ice Cream Partners  in
October,  the combination of Haagen-Dazs' strength in ice cream with Nestle,'s
Novelty lines has led to market share gains.

Consumer takeaway trends for Pillsbury North America.

Total  consumer  takeaway  for Pillsbury North America  was  up  1.4%  against
category  growth of 1.8%.  However, there was a mixed performance by category.
Consumer  takeaway (US dollar sales) in the 24 weeks ended  18  December  1999
was:
                                                   Category   Pillsbury
                                                     growth   NA growth
                                                          %           %
Refrigerated Baked Goods                                3.2         1.7
Desserts and Specialty Products                         0.2         2.6
Frozen Breakfast                                      (1.3)       (0.6)
Green Giant Frozen                                    (3.0)       (6.8)
Green Giant Canned                                      2.5         5.5
Ready-to-Serve Soup                                     0.4        10.6
Pizza/Hot Snacks                                        7.8         8.7
Mexican                                                 3.4       (5.0)
Total Pillsbury North America                           1.8         1.4

Source: AC Nielsen.  Excludes Ice Cream.

BEER

Turnover 1999 £1,195 million, 1998 £1,166 million.

Turnover was up 1% on an organic basis.  Turnover benefited by £49 million  in
the  period, following the acquisition of United Beverages Holdings  in  March
1999.

Guinness brand volume up 2%.

Comparable total volume was up 1% in the period.  Guinness volume continued to
grow,  although  the  reported increase for the period was  affected  by  soft
trading  in  Ireland at the beginning of the year and the decision  to  reduce
stock  levels  in the United States.  Organic volume growth by region  was  as
follows:
                                                      Total            
                                                     volume    Guinness
                                                          %           %
Ireland                                                   -         (3)
Great Britain                                             3           3
Africa                                                    9          11
Asia Pacific                                              2           6
United States                                           (3)         (9)
Other (including discontinued)                          (1)           1
Total                                                     1           2

Organic operating profit growth was 14%.

Operating profit grew to £161 million from £149 million in the prior period as
a result of strong trading performance in Africa and improved operating margin
in Europe.

In  Ireland, market share was maintained 
and the market improved after a  slow start.

In Ireland, total volume was flat but market share was maintained and Guinness
volume  was  down 3% in the first half reflecting the slowdown in the  overall
beer  market.   However, in the second quarter total  volume  was  up  4%  and
Guinness volume was up 1%.  Prices were increased in May 1999 and this  had  a
favourable  profit  impact in the period.  Marketing spend was  increased  but
cost reductions have led to margin improvement and operating profit is up.

In  Great  Britain, Guinness volume growth 
of 3% continues to drive profitable growth.

In  Great  Britain, total volume grew 3% and the Guinness brand  continues  to
perform  strongly  with  volume  growth  of  3%.   Effective  advertising  and
promotional  activity, particularly around the Rugby World Cup,  continued  to
drive  volume.   This volume growth, together with the positive  price  effect
from  the May 1999 increase, has delivered operating profit growth and further
margin improvement.

In Spain, Cruzcampo performed well and volume was up 3%.

Operating  profit from Cruzcampo was £30 million, an increase  of  7%  on  the
prior  year,  driven  by  increased volume and cost reduction.   The  sale  of
Cruzcampo to Heineken was completed on 27 January 2000.

In Africa, operating profit increased, driven by 
strong growth in volume.

Total volume in Africa grew 9% with Guinness volume up 11% following increases
of 20% in Nigeria, 4% in Ghana and 10% in Cameroon.  Strong volume performance
on  the  premium  Guinness  Foreign  Extra  Stout  brand  has  contributed  to
significantly improved profit across the whole region.

In  North  America,  increased marketing continues 
to drive higher  depletions while the reduction 
in inventory levels has impacted volume.

Depletions  in the United States were up in total by 12% and for the  Guinness
brand  are  up  10%.   Market share in the taste beer  category  continues  to
improve.   Supply  chain improvements have been introduced  and  have  reduced
inventory  levels across the US business.  Guinness shipments  were  therefore
down  9%.   These  supply  chain  initiatives have  reduced  working  capital,
improved service levels and reduced costs.

In  Asia Pacific, operating profit has increased 
while volume is in line  with last year.

Turnover  in  Asia  Pacific  improved by 4% on  an  organic  basis  as  volume
recovered.   Guinness brand volume was up 6% and the resulting mix improvement
together with lower overheads have led to increased operating profit.

QUICK SERVICE RESTAURANTS

6%  growth in restaurant numbers and comparable 
restaurant sales in line  with the prior year 
have led to a 9% growth in worldwide system sales.

System  sales  were  up  9% from £3,325 million to £3,611  million.   Reported
turnover  was  up 6% from £443 million to £468 million.  At 31 December  1999,
there were 10,850 restaurants, an increase of 324 in the period.

Organic growth in operating profit was 5%.

Operating  profit  was £105 million (1998 - £98 million).   Operating  margins
rose 0.3 percentage points due to margin improvement in the key markets of the
United States and Germany.

In the United States, operating performance 
improved during the period.

Burger  King had a strong second quarter in the United States with  comparable
restaurant sales (comps) up 4%.  This offset a soft start in the first quarter
and  comps  were  flat for the period.  Trials of the new  restaurant  format,
which initially includes changes to 'drive-thru' and image, are going well and
the   resultant  increase  in  sales  in  these  restaurants  is  higher  than
anticipated.  A review of advertising has been carried out and a new  campaign
will be implemented in the second half of the year which is expected to result
in  positive comparable restaurant sales.  Additionally, new product  launches
are scheduled for the balance of the year.

Outside  the  United  States, the system continued  
to  deliver  strong  sales growth.

System sales outside the United States increased by 18% against the comparable
period.   As  a  result of this growth of the system and  in  preparation  for
further strong growth, the organisation has been expanded, primarily in Europe
and  overheads have risen.  Operating profit has therefore not grown  in  line
with  system  sales in this period.  Operating profit from these international
operations now represents 15% of total Burger King operating profit.

In Europe, the United Kingdom, Germany and 
Spain continue to perform strongly.

In  each  of  the  key markets, the United Kingdom, Spain and Germany,  system
sales were up by over 15%.  In the United Kingdom, comps grew 1%, and in Spain
comps  were up 5%.  The strongest performance continued to be in Germany where
system  sales  grew 27% due to 24 new restaurants and comps were  up  2%.   In
addition,  company  restaurants continued to perform  strongly  and  operating
profit grew.

Latin  America  delivered  positive comparable  
restaurant  sales  and  strong operating 
profit growth.

Comps grew 4% in Latin America.  In addition, restaurant numbers grew 13%  and
therefore operating profit grew.

FINANCIAL REVIEW

Exchange rates

Exchange rate movements during the six month period adversely impacted  profit
before  exceptional  items  and tax by £18 million.   The  adverse  impact  of
exchange rate movements on the translation of overseas operating profit was £5
million  and  on  transactions in the period was £10 million, giving  a  total
impact  on  operating  profit of £15 million.  Exchange  rate  movements  also
adversely  affected the share of profits of associates by £2 million  and  the
interest charge by £1 million.

Based  on  current exchange rates, it is expected that the adverse  impact  of
exchange  rate movements on profit before exceptional items and  taxation  for
the second half will be broadly in line with the first half  figures.

Associates

The  group's share of profits of associates before exceptional items was  £121
million  for  the period compared with £111 million for the same  period  last
year, an organic growth of 13%.

Goodwill

Goodwill  amortisation in the year was £7 million, mainly in  respect  of  the
Packaged Food acquisitions last year.

Exceptional items

Exceptional  items in the six month period amounted to a total  charge  before
taxation  of  £325  million,  with a net cash  inflow  of  approximately  £200
million.  The disposals of four European drinks brands resulted in a charge of
£244  million,  of  which £222 million was in respect of  goodwill  previously
written off. The operating cost charge of £79 million comprised £45 million of
merger integration charges and a provision for £34 million litigation damages.
The damages were awarded by an Australian court in a legal dispute with Burger
King's  Australian franchisee, Hungry Jack's Pty Ltd; a notice of  appeal  has
been filed and the appeal hearing is set for November 2000.

Interest

The  interest charge in the period increased to £185 million from £159 million
in  the  comparable  period.  Funding the various share repurchases  cost  £37
million, partly offset by a £14 million benefit in respect of the disposal  of
businesses.

Taxation

The  effective  rate of taxation on profit before exceptional  items  for  the
period  was  26.2%, the same as the rate for the six months ended 31  December
1998.   The charge is based on an estimate of the effective tax rate  for  the
financial year as a whole.

Dividend

Diageo  will pay an interim dividend of 8.4 pence per share on 13 April  2000,
an  increase of 8% on last year's interim dividend.  Payment to US ADR holders
will  be made on 20 April 2000.  The record date for this dividend will be  10
March  2000.   A  dividend reinvestment plan is available in respect  of  this
dividend and the plan notice date will be 23 March 2000.

Cash flow

Free  cash  inflow  was £416 million, compared with an outflow  in  the  prior
period of £73 million.  Cash inflow from operating activities was £929 million
compared  with £753 million last year.  This inflow was after £53  million  of
integration costs and a £319 million increase in working capital mainly due to
seasonal  factors.   Net  interest payments were  £182  million  against  £239
million  in  the  comparable period (which included the cost  of  closing  out
certain  long  dated  financial instruments in  August  1998).   Purchases  of
tangible  fixed assets in the period amounted to £252 million, an increase  of
£38 million.  Tax payments were £78 million compared with £361 million.

The  sale  of  businesses generated £240 million, which was partly  offset  by
acquisitions costing £56 million.  9.5 million ordinary shares were  purchased
for  cancellation in the period at a cost of £54 million, compared  with  10.5
million at a cost of £59 million in the same period last year.

Balance sheet

At  31  December 1999, total shareholders' funds were £4,330 million  compared
with  £4,026 million at 30 June 1999.  The principal reasons for the  increase
reflect  £155 million retained income for the period and the reversal  of  the
£222 million goodwill charged to the profit and loss account on disposals.

Net  borrowings were £5,741 million, a decrease of £315 million from  30  June
1999.   This  decrease  reflects the free cash inflow of  £416  million  noted
above,  net  receipts from sales/purchases of businesses of £184  million  and
reductions  due  to  exchange  movements of £175  million,  partly  offset  by
dividends paid of £398 million and own share purchases of £54 million.

Year 2000

Following   the  completion  of  the  group's  Year  2000  systems  compliance
programmes,  a  process was set up to monitor and communicate  any  Year  2000
compliance failures experienced by the businesses over the millennium  weekend
and  subsequently.  No major incidents have arisen, though a small  number  of
non-critical  issues were reported which were quickly resolved either  through
technical solutions or by the implementation of a manual workaround.  The cost
to the group of managing the Year 2000 problem has been £60 million.


Diageo's  interim statement will be sent to all shareholders.  Copies  of  the
group's  results  presentation  to  be made  to  analysts  and  investors  are
available upon request.  The interim statement and the presentation will be on
the Diageo web site www.diageo.com from 9.30am on 24 February 2000.

Investor   enquiries  Catherine James         020 7927 5272
to:
                                              [e-mail]
Media enquiries to:   Kathryn Partridge       020 7927 5225
                                              [e-mail]


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