The sell-off came despite a relatively confident trading statement at the group's annual general meeting. Sir Anthony Greener, the chairman, said total volume of the nine global priority brands in the key spirits and wine division grew by 3 per cent in the first three months of the current financial year. He added that profits were in line with recent trends.
But Diageo shares fell 34.5p to close at 552p as analysts questioned the strategy. "It is going to be difficult for them to slim down their company when the tail is so big. They can't just say `Oh well, we're not going to focus on the tail'," said John Wakely, an analyst at Lehman Brothers.
"The idea that Diageo, by a little bit of smart financial engineering and focus, can suddenly change the nature of its being is ridiculous. The difficulty of taking a giant supertanker and turning it into an ocean racer is too much."
Diageo's statement said J&B whisky had performed well in Spain but remained weak in other markets. Bailey's, Cuervo and Malibu have all performed well in the US.
In packaged food, volumes in the Pillsbury business are up in North America. Marketing investment will be increased by 15 per cent in the first half.
In beer, Guinness volumes are flat. UK volumes are in line with last year but volumes are lower in Ireland. Burger King sales are down by 3 per cent in America compared with a strong period last year.
Analysts regretted that Diageo is still talking about how to deliver organic growth two years after the merger of Guinness and Grand Metropolitan.
In September, Diageo reported a 4.5 per cent fall in annual pre-tax profits to pounds 1.7bn, but said underlying sales and profits had bounced back in the second half.Reuse content