Diageo PLC’s new chief executive, Dave Lewis, has outlined a comprehensive plan to cut $1 billion in costs over the next three years as part of efforts to revive the struggling global drinks company. Lewis, who assumed leadership in January 2026, emphasized that the savings would come from an extensive overhaul of the company’s regional teams, supply chain, and back-office functions. While he declined to specify the number of job losses, industry analysts estimate that between 3,000 and 5,000 roles could be affected, with finance, technology, and human resources divisions likely to bear the brunt.
The restructuring follows a period of weak growth and declining sales for Diageo, which owns well-known brands including Guinness, Johnnie Walker whisky, Smirnoff vodka, Captain Morgan rum, and Gordon’s gin. The group reported a 3 percent drop in sales to $19.6 billion in its fiscal year ending June 2026, alongside a 23 to 27 percent fall in operating profit, driven in part by a $900 million restructuring charge and a $1.5 billion impairment related to its Turkish operations. North America, which accounts for around 37 percent of Diageo’s revenue, remained a particular challenge, with an 8.4 to 9.1 percent decline in sales attributed to increased competition and softness in the tequila segment.
Lewis described the company’s previous cost structure as overly complex and fragmented across various countries, calling it “a route to failure.” He noted that trimming duplication and complexity was essential to creating a more agile and competitive business. The restructuring will cost approximately $1.2 billion, with a majority of those expenses already incurred.
Despite the challenges, Lewis expressed confidence in Diageo’s core brand portfolio and growth potential in emerging categories. He plans to increase investment in ready-to-drink canned cocktails, a segment where the company has been slow to capitalize, and to expand Guinness’s global footprint, especially with new investment in its Dublin facilities. He also highlighted renewed focus on revitalizing key brands such as Smirnoff, Captain Morgan, and Crown Royal, acknowledging that the company had not done “a great job” with them recently.
The restructuring plan includes strategic measures to offer more competitively priced products and smaller bottle sizes to meet changing consumer preferences, particularly amid ongoing cost-of-living pressures in key markets like the United States and Britain. Lewis emphasized that the savings would enable selective innovation without further profit reductions.
Investor response to the overhaul was positive, with Diageo’s shares rising as much as 11 percent during trading before closing up around 5.6 percent, reflecting market approval of Lewis’s swift action to address the company’s issues.
Industry observers noted parallels with Lewis’s prior work in supply chain management and restructuring during his tenure at Tesco, suggesting his approach at Diageo could stabilize the firm. However, experts caution that beyond cost-cutting, Diageo will need a compelling growth strategy to overcome ongoing market challenges and shifting consumer behaviors.
The company forecasted low single-digit organic sales growth through its 2029 financial year, a target lowered from the previous goal of 5 to 7 percent. Lewis indicated that North American sales might decline again in the short term before stabilizing and eventually improving.
This restructuring marks a significant step in Diageo’s efforts to adapt to evolving market conditions, with an emphasis on streamlined operations, competitive pricing, and focused brand investment aimed at returning the FTSE 100 drinks giant to sustained growth.