Trading Statement

Diageo PLC
11 July 2000


Registered office: 8 Henrietta Place London W1M 9AG Registered in England
No.23307


DIAGEO TRADING STATEMENT

Diageo,  the  international food and drinks company,  released  the  following
trading  statement ahead of its preliminary statement of results for the  year
ended 30 June 2000, which is to be issued on 7 September 2000.

Commenting on this trading statement, Group Chief Executive John McGrath said:

In the year to June 2000 our Spirits and Wine business has performed strongly.
We  have  achieved  high level of sales growth through volume  growth,  robust
pricing  action and mix improvement.  This strength continues  to  be  centred
around  the  global priority brands and on our major markets.  As  anticipated
Packaged  Food  will  achieve modest organic growth in the  year.  Foodservice
continued  to  perform strongly and in Pillsbury North America in  the  second
half,  we  reduced  marketing spend on trade promotions  which  had  delivered
volume  growth in the first half of the year but not operating profit  growth.
Our  beer  business is developing a more efficient cost structure and  margins
have  improved  again  in  the  year.  In Quick Service  Restaurants  we  have
continued to implement a significant restaurant opening programme and to drive
strong  International  performance.  We  have  also  begun  to  implement  the
transformation programme which has tested so well during the year.

Trading  performance  in the second half of the year  was  in  line  with  our
overall  expectations  at  the time of our interim  announcement  and  we  are
therefore on track to achieve our targets in terms of operating profit in  the
year just ended.

Spirits and Wine

This  was  the first full year of UDVs strategy .  Increased focus behind  the
key  brands has delivered turnover growth, expected to be up 9% for  the  full
year on an organic basis.  This is the result of strong pricing action and mix
improvement  particularly on the global priority brands (GPBs).   Turnover  of
the  GPBs  is  expected to be up 10 %.  Total reported volume was affected  by
disposals  and by the discontinuation of non-core brands.  Volume is  expected
to  be up by 2% on an organic basis, with volume of the global priority brands
anticipated  to be up between 4% and 5% for the full year.  The  abolition  of
European  duty  free  sales has led to a reduction in sales  of  the  GPBs  of
approximately  700,000 cases in the year, equivalent to  nearly  a  percentage
point of volume growth. In the second half, volume of the GPBs was as expected
down  by about 2% but net sales value was up 3% as a result of continued focus
on price re-positioning supported by increased marketing.  Volume of the local
priority  brands will be up about 10% in the full year as a result  of  strong
performances  by  Dimple  in  Korea, Stolichnaya in  the  United  States,  and
Smirnoff Ice in the United Kingdom.  Wine volume is expected to be down 2% for
the  full  year.  Volume improved in the second half, driven in  part  by  the
successful  re-launch of the Glen Ellen brand in the US  and  the  success  of
Blossom Hill in the UK.

Investment in marketing has continued to increase strongly, mainly behind  the
GPBs, and on an organic basis the increase in marketing is expected to be  12%
for the full year.

In  UDVs major markets of the United States, the United Kingdom and Spain  the
business has continued to perform strongly with volume expected to be up by 7%
and net sales value up 15%. Marketing spend increased over 15% on the GPBs  in
these markets.

In  UDVs  key  Asian markets, the decision to continue to support  the  brands
during  the  period after the economic collapse there in 1997 has  provided  a
strong  platform for volume and profit growth in Thailand and Taiwan.   Volume
in both countries was up over 20%.  In Latin America the economic difficulties
in  that  region have had an impact on trading performance however  the  local
priority brands have continued to increase market share.

Packaged Food

As  anticipated at the time of the interim announcement, volume and  sales  in
Packaged  Food  are  expected to be slightly down  compared  with  last  year.
However,  operating profit will be flat to slightly up over  last  year  as  a
result of acquisitions and organic growth in the Foodservice business.

In  Pillsbury  North America, volume and sales are expected to decline  on  an
organic  basis  by about 2%.  In the Dough categories, consumer  takeaway  has
been  in line with last year.  Strong performance in the Pizza and Hot  Snacks
category and in Toaster Pastries has continued in the second half.  In the
non-
Dough categories, the Progresso brand continues to perform very strongly  with
consumer takeaway up over 10%.  In the Mexican meals segment, the Old El  Paso
brand  has  grown  2% against a market up 1% due mainly to a  new  dinner  kit
introduction,  which was successfully launched in January.  The  reduction  in
promotional  spend in other non-dough categories has, as anticipated,  led  to
lower volume in the second half.

In Foodservice, volume and sales will be up strongly as a result of the impact
of  acquisitions  and organic growth.  In International,  volume  will  be  up
slightly year on year.

Marketing spend in Packaged Food was down in the second half against the prior
year but will be up for the full year.

Ice  Cream Partners, the joint venture formed in October 1999 with Nestle,  is
beginning to deliver stronger consumer takeaway and market share improvement.


Beer

Total  Beer volume is expected to be up 1% with Guinness brand volume  up  2%.
Volume of the Guinness brand in Ireland is expected to be down 4% for the full
year.   In Great Britain, the Guinness brand has continued to perform strongly
against  a declining beer market and volumes will be up 3% for the full  year.
In Africa, the re-imposition of excise duty in Nigeria slowed volume growth of
the  Guinness  brand  in that market to 5% in the second  half  and  therefore
volume for the full year in Africa is likely to be up about 7%.  Volume of the
Guinness  brand is likely to be up 2% in Asia Pacific for the full  year  with
strong  growth in the second half in Indonesia off set by the decline in  beer
consumption in Malaysia and Singapore.  In the United States, Draught Guinness
depletions  are expected to be up over 10% for the full year.   Shipments  are
expected  to be up 6% in the second half and down 1% for the full  year  as  a
result of the programme to reduce stock levels in the first half of the year.

Marketing  investment as a percentage of sales will be up in  the  full  year.
Margin  has  continued to improve during the year as a result of supply  chain
efficiencies and a reduction in overheads.

Quick Service Restaurants

System  sales for the full year are expected to be up about 6% driven  by  new
restaurant openings.  World-wide comparable restaurant sales for the year  are
expected  to be flat.  Burger King in the United States has now completed  the
transition from Ameriserve to new regional distributors. The US transformation
programme, which has been developed and tested through the last year,  is  now
being  rolled  out  and  over 1100 franchised restaurants  have  committed  to
implement these changes to restaurant image and drive-thru.
The  International business continues to perform strongly. In Europe  220  new
restaurant openings and 2% comparable restaurant sales growth in both  Germany
and  the United Kingdom have driven a 10% increase in system sales.  In  Latin
America the system has also performed well with comps up 4%.

Exceptional Items

In  February 2000 DCA was acquired and in March 2000 changes were announced to
the  Packaged Food operations based in Minneapolis aimed at reducing cost  and
refocusing  the  sales  organisation there.  Operating  cost  net  exceptional
charges  of $80 million will arise in respect of integration and restructuring
costs.   The sale of Grupo Cruzcampo SA to Heineken NV during the second  half
of  the  year  resulted in an exceptional gain of approximately  £80  million.
Also  in  the  second half of the year costs of $60 million were  incurred  in
respect of the transition to a new distribution system for Burger King in  the
United  States.  This will be partially offset by exceptional  income  of  $28
million,  which  arises  as  part  of Burger Kings  transformation  programme.
Burger  King  has incentivised franchisees with phased royalty changes  for  a
specified time if they agree to new franchise agreements and to upgrade to the
new  restaurant  image within two years.  These items are in addition  to  the
exceptional charges in the interim announcement.

Exchange rates

As  anticipated at the time of the interim announcement the adverse impact  of
exchange  rate  movements on profit before exceptional items and  taxation  is
expected to be approximately £40 million.

Investor Relations enquiries:
Catherine James             020 7927 5272

Media enquiries:
Kathryn Partridge           020 7927 5225