Diageo Trading Update

Diageo PLC
12 July 2001



DIAGEO YEAR END TRADING UPDATE

Diageo's premium drinks business Guinness UDV continues to perform strongly.
As outlined at the interim results announcement in February the formula for
growth remains the same,namely: to invest in Diageo's premium drinks brands,
drive further innovation behind these brands, focus by individual market and
ensure that Guinness UDV's cost structure is a source of competitive
advantage.

For the full year the levels of growth achieved in Guinness UDV in net sales
value and volume are a continuation of those seen in the first half of the
financial year. This growth is the result of the strong trading performance
delivered by priority brands. In particular the global priority brands
delivered further growth in volume and net sales value. While the major
markets of North America, Great Britain, Ireland and Spain continue to be the
engine for growth in Guinness UDV, key and venture markets continue to deliver
through focus on the priority brands by market.

Pillsbury's performance in the second half has been impacted by a slowdown in
recent months of the trading momentum achieved in the first half of the year. 
This is due to uncertainty relating to the timing of the completion of the
combination with General Mills, although weakness in the Pillsbury Bakeries
and Foodservice business has impacted overall performance.

As reported at the time of the interim announcement, trading at Burger King is
challenging. Worldwide comparable restaurant sales remain negative. In
addition trading in Europe has been adversely affected by current consumer
concerns about BSE and foot and mouth disease. The new management team is now
reviewing all aspects of the organisation and is developing an appropriate
strategy for the future of Burger King. This will give rise to one off costs,
not expected to exceed £50 million. These are mainly non-cash items.

Commenting on this trading update, Group Chief Executive Paul Walsh said:

'Diageo's focus is on premium drinks.  Guinness UDV continues to perform
strongly - in line with our expectations. Our most important brands and our
most profitable markets are driving improving returns. As we build our
consumer understanding we are delivering top line growth driven mainly by the
performance of our global priority brands and continued success as we roll out
our ready to drink portfolio.

'In the future, growth in premium drinks will drive Diageo's growth in the
same way as it has done in the year just ended.

'We are working towards Diageo's future as a company focused on its position
as the world's leading premium drinks company. Our proposed acquisition of the
Seagram businesses and our agreement to combine Pillsbury and General Mills
are subject to regulatory approval and we endeavour to address the inquiries
of the staff of the Federal Trade Commission.  We have appointed a new
management team at Burger King who have the skills and experience required to
achieve Burger King's successful transition to a future outside Diageo. The
integration of Guinness UDV is being achieved across the markets and the
business has begun the new financial year in excellent shape.'

Diageo will announce its preliminary statement of results for the year ended
30 June 2001 on 6 September 2001.



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Investor enquiries Catherine James [phone]
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Note to editors:

Diageo plc

Diageo is the world's leading drinks company.  It was formed in December 1997
through the merger of Guinness and GrandMet.  Diageo has an outstanding
portfolio of world famous consumer brands including Smirnoff, Johnnie Walker,
Tanqueray, Guinness, J&B, Baileys, Malibu and Burger King. Diageo employs some
70,000 people across more than 200 markets worldwide.

For more information about Diageo (LSE: DGE, NYSE: DEO), please visit 
www. diageo.com