It was a weak quarter in Asia-Pacific with South East Asia seeing further negative impact from the political instability in Thailand and lower trade confidence across a number of markets, the company said in a statement.
"Elsewhere, Korea continued its positive momentum, and India and Global Travel Asia and Middle East both delivered double digit growth," Diageo said in its interim management statement.
Without sharing details of sales and profit, Diageo said as on March 31 2014, its net assets were 7,382 million pounds while it was 8,038 million pounds as on December 31 2013.
The reduction was primarily the result of providing for the interim dividend of 493 million pounds and adverse foreign exchange movements, it added.
Commenting on the company's performance, Diageo Chief Executive Ivan Menezes said: "Our performance reflects the challenging environment we are operating in. Consumers in North America are most resilient, as are consumers of our reserve brands in most markets. In Western Europe the economy, consumer confidence and our business are all improving slowly but consistently."
In the emerging markets, currency volatility and caution about the outlook for GDP growth are negatively impacting business and consumer confidence, he added.
Diageo Plc, which made a Rs 11,448.91 crore offer earlier this week to public shareholders of United Spirits to acquire an additional 26 per cent stake in its second attempt to gain majority control in India's number one alcoholic beverages firm, however is optimistic on long term potential of emerging markets.
"The current emerging market weakness does not reduce our confidence in the long term growth opportunities of these markets and we have continued to invest to build our brands and routes to consumer for the future," Menezes said
He, however, added: "Current trends will however impact top line growth this financial year, but strong management of our cost base means that we remain committed to the delivery of our margin expansion goals."
The third quarter saw currency and economic weakness impact consumer confidence across many emerging markets, while consumer trends in the developed markets were in line with those in the first half.
In North America consumer trends are unchanged from the first half and the performance in the quarter was in line with expectations, with organic net sales up 1.2 per cent given the strong third quarter last year, the company said.
Western Europe continues to drive incremental improvement and benefited from the phasing of sales in the quarter, it added.