In its first full-year report since the appointment of Sir Dave Lewis as CEO, Diageo said that its two-year restructuring programme is well underway. The drinks giant outlined plans to save up to $1 billion over the next three years, which will include job cuts. The group, whose portfolio includes Smirnoff vodka and Captain Morgan rum, also plans to double its Guinness production. The announcement pushed shares in the company up by 6.5% by 13.30 GMT.
Under the guidance of Lewis, who became known by the nickname “Drastic Dave” for his history of cost cutting at Tesco and Unilever, the company predicted the new framework would deliver $850 million in savings over two years, starting in fiscal 2027, while supply chain initiatives will deliver approximately $150 million.
Alongside the announcement of a 2% decline in sales to $19.6 billion but slightly better-than-expected operating profit at $3.2 billion, Lewis noted growth in Europe, Latin America and Africa was offset by weakness in North America and Asia Pacific.
Report findings
Elsewhere, in the preliminary results for the year ended 30 June, the maker of Johnnie Walker reported an organic net sales decline of 8.4% in North America, driven primarily by weakness in the US and challenges in the spirits category. Organic volumes declined here by 6.7%. In the rest of North America, sales fared better, with net sales up by 7.7% in Canada, supported by the growth of Guinness.
Across Europe, organic net sales increased by 3.4%, with growth led by Turkey and Great Britain, offset by declines in Central and Eastern Europe. Beer sales increased the most, led by Guinness in Great Britain and Ireland, while spirits declined and RTD sales achieved low-single-digit gains.
CEO comment
On the 2026 report, Lewis commented: “We are pleased with our progress in LAC, Europe and Africa. We are focused on recovering our competitiveness in NAM and we are working through the consequences of government policy in Chinese white spirits.”
He added: “The revised operating framework is being rolled out across Diageo and the changes are significant. In 2026 this change incurs a cost of $0.8 billion with savings realised over two years starting in fiscal 27. These savings will allow us to invest in the turnaround without needing to reduce operating profit.”
The programme announced today is expected to bring $1 billion in savings over three years, but Lewis, who has been leading Diageo since January 2026, said he did not wish to disclose the number of jobs affected. The full programme will cost $1.2 billion, with 70% of its costs already incurred. In fiscal 2026, the cost of the restructuring came to between $0.8 billion and $0.9 billion.
Others in the drinks industry have also been restructuring with Heineken expected to cut up to 6,000 jobs, and Pernod Ricard planning to save $1.15 billion by its fiscal 2029.
