Diageo has announced a major investment totaling £750 million in its iconic Guinness brand as part of a broader strategy to boost growth under new leadership. Sir Dave Lewis, who took over as chief executive in January, revealed plans to nearly double Guinness’s production capacity, citing strong demand from younger consumers, particularly women.
The investment forms a key element of a wider $3.75 billion (£2.8 billion) expenditure programme aimed at revitalizing the company’s portfolio. Within this, $1 billion will be directed specifically to Guinness. Lewis, known as “Drastic Dave” for his cost-cutting reputation developed during his tenure at Tesco, intends to fund this growth through significant operational savings elsewhere in the business.
The company is seeking $1 billion (£750 million) in cost reductions without cutting operating profit, focusing largely on eliminating redundancies and reducing overheads. Despite declining to specify exact job losses, Lewis indicated that the bulk of changes would affect back-office functions rather than sales teams, citing what he described as “massive duplication” in global operations built up over many years.
Diageo also revealed it had already incurred $514 million in redundancy costs over the past year, a sharp increase from the $73 million recorded the previous year. Lewis emphasized that Dublin would remain central to Guinness’s operations, noting that Ireland is the largest recipient of new investment within the company’s plan. Expansion of production is already underway, with a second Guinness brewery under development at Little Connell in County Kildare.
The investment announcement coincided with the release of Diageo’s annual results, which underscored the challenges facing the group. Operating profit dropped 27% to $3.2 billion in the year to June, while net profit fell nearly 23% to $2 billion amid weaker demand in key markets such as the United States and China. Revenue declined 3% to $19.6 billion.
The spirits company, which owns other major brands including Johnnie Walker, Smirnoff, and Tanqueray, has also adjusted its pricing strategy. Lewis acknowledged that some spirits had become too expensive during the pandemic and subsequently, prompting price cuts on flagship products such as Bell’s blended whisky. In some UK supermarkets, a one-litre bottle of Bell’s is now priced around £18.50, down from approximately £25 a year ago, a move that has already generated an uptick in sales volume.
Investors responded positively to Diageo’s turnaround plan, with shares rising as much as 10% following the announcement. The strategy reflects Lewis’s emphasis on operational efficiency to support strategic growth opportunities within the global beverage market.