Trading Statement

Diageo PLC
8 July 2002



                         Diageo Year End Trading Update

During the financial year ended 30 June 2002 Diageo has delivered its
objectives: continued profitable top line growth and value creation for
shareholders.

Diageo's premium drinks business has again built upon the positive trends
achieved in the prior year.

In the second half, the performance of the four Major markets, North America,
Great Britain, Ireland and Spain, was in line with expectations. The volume
performance in Key markets in the second half has been impacted by the worsening
economic and political situation in Latin America. Stock level reductions,
distributor realignments and the decision to increase prices as a result of
currency devaluation in Key markets have adversely affected the overall volume
performance of Johnnie Walker Red, local priority and category management
brands. There has been little overall change in the performance of the Venture
markets.

Volume growth of the global priority brands (excluding ready to drink products)
has improved year on year. In line with previous statements, volume growth in J&
B, which had seen buying-in in Spain in the first half ahead of a price
increase, slowed in the second half, as did the volume growth in Baileys. Volume
growth of global priority brands has slowed slightly as a result. Stronger
performance by both Johnnie Walker and Guinness in the second half has reversed
the volume declines reported in the first half.

Growth in RTD products was led by Smirnoff Ice as volume of Ice doubled in the
year. New products in the RTD category have performed well even as the market
place has become more competitive. Following its launch in May, sales of Captain
Morgan Gold have been good, although volumes so far have not met the high
expectations that Diageo set for it.

The full year results will therefore show continuing profitable top line growth
driven by:

  • growth in our major markets
  • growth in the eight global priority brands

  • success in innovation

The trading results of the second half have benefited from the addition of the
Seagram businesses acquired in late December 2001. The performance of the
Seagram brands in the period has met all expectations and laid the platform for
their successful integration into Diageo.

Diageo's strategic realignment behind premium drinks was substantially completed
in the year. The Pillsbury disposal was completed in October 2001 and the
acquisition of the Seagram spirits and wine business was completed in late
December 2001.

In the second half of the year further strategic progress has been achieved:

  • A new longer-term agreement for the distribution of the Cuervo brand in
    the United States was entered into in February 2002.
  • The requirements of the FTC in respect of the Seagram acquisition were
    satisfied with the disposal of Malibu in May 2002.
  • A process to dispose of Burger King began in March 2002 and is progressing
    as planned. During the second half, Burger King continued to show good signs
    of improved performance.

Diageo is committed to creating value for shareholders as evidenced by the
return of capital through share buybacks. During the year ended 30 June 2002,
198 million shares were purchased for cancellation amounting to a return of
capital to shareholders of approximately £1.7 billion.

Commenting on the year just ended, CEO Paul Walsh said:

'Diageo has achieved the objectives we identified at the beginning of this year.
We have completed two major transactions, focussed the business on premium
drinks and we are delivering consistent performance.

'For the third consecutive year Diageo has achieved strong top line growth in
premium drinks. In the year to come we will maintain our consistent approach to
continue to generate growth. Our performance will benefit significantly from our
newly acquired brands, particularly Captain Morgan, Crown Royal, Windsor and
Cacique.'

Notes to editor:

 1. Diageo will announce its preliminary statement of results for the year ended
    30 June 2002 on 5 September 2002.
 2. There were 3,216 million shares in issue at the end of the year. The weighted
    average number of shares in issue in the year ended 30 June 2002 was 3,354
    million shares.

Diageo is the world's leading premium drinks business with an outstanding
collection of brands including Johnnie Walker, Guinness, Smirnoff, J&B, Baileys,
Cuervo, Tanqueray and Captain Morgan.

Diageo is a global company, trading in over 180 markets around the world. The
company is listed both on the London Stock Exchange (DGE) and on the New York
Stock Exchange (DEO). For more information about Diageo, its brands, people and
performance, visit us at www.diageo.com.

For further information:

Media enquiries to      Kathryn Partridge          + 00 44 (0) 20 7927 5225
                                                   [e-mail]

Investor enquiries      Catherine James            + 00 44 (0) 20 7927 5272
                                                   [e-mail]


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