Diageo has unveiled a $1 billion (£743 million) cost-cutting programme as new chief executive Dave Lewis accelerates efforts to revive growth at the world’s largest spirits producer following a difficult year marked by weaker sales and profits.
The maker of Guinness, Gordon’s gin and Baileys said the savings would be delivered through a sweeping operational overhaul, with around $850 million expected to come from efficiencies across the business and a further $150 million from supply chain improvements.
The restructuring will carry a one-off cost of approximately $1.2 billion, although the company has yet to disclose how many jobs could be affected. The announcement follows reports that 172 distillery workers in Scotland have been placed at risk of redundancy.
Mr Lewis, the former Tesco chief executive known for leading extensive restructuring programmes, said there was “hard work ahead”, particularly in North America, where trading conditions remain challenging.
The company reported a 3 per cent decline in annual net sales to $19.6 billion for the year to June, with weakness concentrated in its largest market. North American sales fell 9.1 per cent as lower pricing in the United States and softer demand for tequila weighed on performance.
The downturn was partially offset by stronger trading in Europe, where net sales increased 5.7 per cent. In Great Britain, sales rose 6.8 per cent, supported by continued double-digit growth in Guinness, which remains one of the group’s strongest-performing brands.
The results mark an early test for Mr Lewis, who took over after a period of disappointing performance under former chief executive Debra Crew.
Alongside the restructuring, Diageo reduced its proposed dividend by more than half following the decline in earnings, reflecting management’s focus on preserving financial flexibility while investing in the turnaround.
Despite the weaker financial performance, investors welcomed the scale of the restructuring plans and the commitment to restoring profitability. Shares rose around 6 per cent after the results.
Mr Lewis said the new strategy would create a “more agile, competitive and cost-effective operating model”, adding that the company was confident it could return to sustainable profit growth without sacrificing long-term shareholder value.
The overhaul underscores the growing pressure on global consumer goods companies to improve efficiency as slowing demand and changing consumer preferences reshape the premium drinks market.
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