Updated / Thursday, 6 Aug 2026 14:56
Diageo’s new chief executive Dave Lewis has today unveiled a $1 billion restructuring plan, turning to aggressive cost-cutting in order to reset performance as the world’s top spirits maker anticipates years of low growth.
Investors welcomed the overhaul as a sign that Lewis was moving quickly to tackle years of stagnant or falling sales, sending shares in the Guinness and Johnnie Walker whisky maker up as much as 11% to a more than five-month high.
The stock later pared gains to trade 6.5% higher – on track for its best day since November 2020 if gains hold.
The spirits industry has been struggling to chart a path back to growth as people have changed what, where and how much they drink.
Lewis, nicknamed “Drastic Dave” for his history of cost-cutting at Tesco and Unilever, told journalists a restructuring programme of this size that changes the cost structure of the entire business had “very significant impacts” on colleagues.
Lewis, who has been leading Diageo since January, said he did not want to disclose at this point the number of jobs affected and in some regions consultations were ongoing.
Big changes were focused on global, back-office functions and in areas where there was “massive duplication” in processes in countries, regions and globally, he said.
Some savings would also come from cutting back spending on more capacity in anticipation of growth that ultimately never materialised, Lewis said.
Diageo reported severance costs of $514m for its fiscal year ended June 30, sharply up from $73m a year earlier.
The programme, which would bring the $1 billion in savings over three years, would cost $1.2 billion, with 70% of its costs already incurred, Diageo said.
Other drinks makers have also restructured recently. Heineken said in February it would cut up to 6,000 jobs, while Pernod Ricard last year launched a plan to save €1 billion ($1.15 billion) by its fiscal 2029.
Diageo, which also makes Smirnoff vodka and Captain Morgan rum, forecast low-single-digit organic net sales growth up to its 2029 financial year, softer than its previous target of 5% to 7% medium-term growth, which it scrapped in 2025.
It also reported a 3% drop in net sales to $19.64 billion in the fiscal year to June 30.
Lewis said the new outlook was shaped by weakness in its largest market, North America, which is expected to decline next year, stabilise in two years, and grow thereafter.
Sales in the region fell 8.4% in fiscal 2026, more than the 8% analysts predicted, but Lewis said he was confident he could restore performance without sacrificing profits.
Globally, Diageo also expects mid-single-digit organic operating profit growth with earnings per share growth, and cumulative free cash flow of $8 billion over three years after exceptional cash costs by 2029.
Chris Beckett, consumer staples analyst at Quilter Cheviot, said Lewis seemed to be living up to his nickname with deeper cuts that will last longer than many expected.
“If it can hit its three-year targets, however, then the pain of this restructuring will be considered worth it and investors should see greater returns once again,” he said.
