‘Drastic’ Dave to serve up new vision for Guinness maker Diageo
It’s been a rocky 12 months for drinks titan Diageo and Sir Dave Lewis will be looking to cure the firm’s long-running hangover when he serves up his future vision next week.
Diageo’s stock has tumbled over 15 per cent in the last 12 months with a notable drop in November after operating profit growth was forecast to be in the low to mid single-digit range for the year to June 2026, down from its previous guidance of mid single digits.
Shares slid over six per cent on the news as the drinks maker also warned it expected to take a $200m (£153m) knock from President Donald Trump’s US tariffs.
But just a week later the firm’s turnaround would gather some pace on the announcement of ‘Drastic’ Dave taking the reins. Diageo has since gained 15 per cent in the year-to-date as momentum picked up.
“Diageo’s shares are finally showing a little more spirit after a terrible run,” analysts at AJ Bell said.
“Whether this is specific to the company, or part of a wider recovery for unloved consumer staples plays, is not easy to divine but new chief executive Sir Dave Lewis will be pleased to see it all the same as he prepares to put his stamp on the company.”
Diageo runs dry after changing consumer behaviour
Lewis, who is credited with the comprehensive turnaround of Tesco during his tenure as group chief executive between 2014 to 2020, was dubbed ‘Drastic Dave’ after his time at Unilever, which featured a relentless focus on cost-cutting and rationalisation.
And with Lewis a month into his post at Diageo, conversation will drift beyond the bottom line and shift to future guidance.
The FTSE 100 giant – which also owns spirit brands such as Smirnoff, Johnnie Walker and Captain Morgans – will deliver its full-year results on Wednesday where analysts are pencilling in a three per cent drop in sales and a four per cent drop in profit, leaving pre-tax income at $2.7bn.
Richard Hunter, head of markets at interactive investor, said: “It remains to be seen whether the concerns overhanging the sector as a whole are cyclical or societal.”
Diageo’s profit margins have been squeezed as consumers turned to lower alcohol alternatives and cheaper spirit brands.
“There is some debate as to whether the younger consumer market is a growth area at all given changing attitudes, although the growing proliferation of the “moderation”, low to no-alcohol drinks could provide an opportunity,” said Hunter.
Lewis replaces former boss Debra Crew, who abruptly stepped down with immediate effect in July after just two years at the helm of the business.
Her tenure was defined by severe headwinds after she was forced to issue a profit warning five months into the job following a misread sales trends in Latin America – a key market – leading to a steep drop in earnings guidance.
Diageo’s annual report revealed that Crew’s remuneration increased from $3.8m to $4.8m in her final year in charge.