Diageo, the world's largest spirits company and owner of brands such as Johnnie Walker, Smirnoff, and Guinness, has experienced a dramatic reversal in fortunes since its shares peaked on January 4, 2022, with a market value of nearly £90 billion (approximately $121 billion) [1]. The company's share price has since more than halved, driven by a combination of slowing post-pandemic sales, inflationary pressures following Russia's invasion of Ukraine, and internal missteps, including a profit warning in November 2023 due to poor inventory management in Latin America and the Caribbean [1].
The situation culminated in Diageo reporting its first annual sales slowdown since the pandemic in July, and the company faced additional uncertainty from renewed U.S. tariff risks after Donald Trump's return to the White House in 2025, leading to the abandonment of a long-standing sales target [1]. These challenges resulted in the ousting of CEO Debra Crew in July last year, with Dave Lewis, a turnaround specialist known for his cost-cutting expertise at Unilever and Tesco, taking over at the start of the year [1].
Since his appointment, Lewis has taken decisive actions, including slashing the dividend and openly criticizing Diageo's "frankly very poor" distributor service [1]. He has already sold the Indian Premier League cricket team Royal Challengers Bengaluru for £1.4 billion and is reportedly considering the sale of Diageo's 63% stake in Sichuan Swellfun, a Chinese baijiu producer [1]. There has also been speculation about selling Diageo's 34% stake in Moët Hennessy, though Lewis downplayed this in February [1].
Investors are keenly awaiting Lewis's detailed turnaround plan, which is expected to focus on cost reductions and a reassessment of the company's "premiumisation" strategy, which may have alienated some customers by emphasizing higher-priced brands [1]. The market is watching closely for Lewis's approach to restoring sales growth and improving operational efficiency, with further disposals and pricing adjustments anticipated [1].
CONCLUSION
Diageo faces significant challenges after a sharp decline in share price and sales growth, prompting a leadership change and a strategic overhaul under new CEO Dave Lewis. The market is anticipating further cost-cutting measures, potential asset sales, and a shift in pricing strategy as Lewis seeks to restore investor confidence and return the company to growth.