Dive Brief:
- Guinness owner Diageo unveiled a $1 billion savings plan during the next three years to turn around the business.
- The overhaul will include job cuts and a restructuring of Diageo’s operating framework, which is expected to deliver $850 million in savings, the spirits giant said Thursday. The plan also accounts for another $150 million in savings due to supply chain adjustments.
- The savings will be invested in “relevant brands in competitive categories,” such as Smirnoff and Captain Morgan in ready-to-drink beverages. Guinness remains a growth spot for the company, and Diageo said it plans to “leverage this opportunity more fully.”
Dive Insight:
The restructuring plan represents an aggressive move to return the beer and spirits giant to profitable growth under CEO Dave Lewis, who took over in January. Media reports indicate Lewis, who has earned the moniker “Drastic Dave,” has cut up to 30% of some Diageo teams.
Lewis didn’t specify in a presentation on Thursday how many jobs would be impacted.
“A restructuring program of this size obviously has very significant impacts on Diageo colleagues, and I’d like to put on the record my deep appreciation for the way that Diageo colleagues have engaged with this changed program, most of which has been communicated throughout the business a month or so ago,” he said.
Diageo posted net sales for the 2026 fiscal year of $19.6 billion, a 2% decrease over last year.
There were a few bright spots, with Smirnoff RTDs and Guinness leading to organic growth of about 4% in the company's beer business.
Lewis said Guinness and the broader RTD category are “strategic battlegrounds” where he feels confident Diageo can win.
Tequila, however, was a particularly weak spot for Diageo in its most recent fiscal year, with a 21% decline year over year, due both to Casamigos and Don Julio, CFO Nik Jhangiani said in a presentation.
Diageo plans to improve its business in North America, a region that was a point of weakness in fiscal year 2026, with an 8.4% decline. The U.S. will be a point of focus in Diageo’s revamp plan.
Lewis clarified during Diageo’s capital markets day that the turnaround plan is “organic,” and will not be entirely funded by acquisitions. In growing RTD, Lewis said Diageo will focus on innovation from existing brands, as opposed to acquiring or launching new ones.
“We have a unique portfolio as Diageo, and we want to use it much more proactively than perhaps we have done in the past, and the way that we do that is we bring those category strategies, that category lens, on top of those brilliant brands in order to manage the portfolio much more proactively,” Lewis said.
