Diageo faces US probe on sales figures

26-Jul-2015 - Last updated on 27-Jul-2015 at 09:09 GMT

Diageo's global brands include Smirnoff, Guinness and Johnnie Walker

Related tags U.s. securities and exchange commission

Diageo says it is ‘working to respond fully’ to a US inquiry on its distribution in the country, reportedly over allegations that it has been shipping excess inventory to distributors in order to boost sales figures.

The inquiry comes from the US Securities and Exchange Commission (SEC), a federal government agency which aims to ‘protect investors, maintain fair markets, and facilitate capital formation.’

It is centred around the accusation that Diageo shipped more cases to customers than had been ordered, meaning it could record higher sales than placed, The Wall Street Journal reported.

A spokesperson for Diageo said: “Diageo has received an inquiry from the US Securities and Exchange Commission regarding its distribution in the United States. Diageo is working to respond fully to the SEC’s requests for information in this matter.”

Channel stuffing

‘Channel stuffing’ is when a company books sales before orders have been placed.

The SEC defines it as when a company “inflates its revenue figures by forcing more products through its pre-existing distribution channel than that distribution channel is capable of selling.”

Diageo is a global company with a portfolio across spirits, beer and wine. Its brands include Guinness, Johnnie Walker, Smirnoff and Baileys.

It is due to release its full year financial results this Thursday (July 30).