Diageo unveils £890m restructuring plan

Drinks giant Diageo is to undergo a £890m restructuring plan which is expected to generate around £740m in savings over the next three years.

 

An operating framework redesign at the Guinness-maker is forecast to generate £632m of the savings, with 40% of that in the 2027 financial year and the rest in fiscal 2028.

 

The group also expects supply chain initiatives to generate £111m of cost reductions, with 25% of that in the next financial year and the balance in following years.

 

Its Accelerate cost efficiency programme, unveiled last year, has already delivered £401m in savings, through consolidating procurement, supply chain agility and stronger cost controls.

 

Diageo is making the cuts in the wake of softer financial performance, with its latest results for the year ended 30 June 2026 showing net sales down 3% to £14.6b. Operating profit also slid 27% to £3.2b.

 

However, in Great Britain, net sales grew 2.9%, driven primarily by double-digit growth in Guinness, more than offsetting softer spirits sales. Guinness on-trade growth also continued to drive positive market share gain and it significantly outperformed the category. Guinness 0.0 increased both volume and net sales by double-digits.

 

Chief financial officer Nik Jhangiani described the year’s performance as “mixed”, citing good momentum in Europe, Latin America and Africa offset by challenges in America and Asia Pacific. He added that the savings accrued by the operating framework changes “will allow us to invest without reducing operating profit”.

 

Ex-Tesco CEO Dave Lewis was recruited to lead Diageo at the beginning of this year in order to turn the company around. He took over from Debra Crew, who stepped down as chief executive and board director in July 2025 by “mutual agreement” after two years in the role.

 

Lewis said that the new strategy is being executed “with a new, more agile, competitive and cost-effective operating model” and that it “gives us confidence that we can return Diageo to a business consistently creating value for shareholders”.

 

“We remain a business with a very strong premiumisation agenda, but by activating our wider portfolio, we will be able to serve more consumers, across a variety of occasions. There is hard work ahead, particularly in North America, where improving performance is a clear priority, but we are confident we can deliver without taking a step back in operating profit,” he said.

 

The group cited ready to drink beverages and Guinness as having long term growth potential.

 

For its 2027 financial year, Diageo forecast broadly flat organic net sales growth, but organic operating profit growth up in the low to mid single digits.

 

Over the medium term it expects low single-digit organic net sales growth and mid single digit organic operating profit.

 

In December 2025, Diageo agreed to sell its shareholding in East African Breweries and the Kenyan spirits business to Asahi Group, which should garner estimated net proceeds of £1.7b.

 

The firm previously sold the Sheridan’s liqueur brand to Portuguese beverage and alcohol company Casa Redondo in September 2025, after having offloaded Safari liqueur to the same firm in July 2024.

 

Last year, Diageo ruled out a sale of its Guinness brand following speculation it could offload its famous stout in a bid to revive growth. Around the same time it sold Cacique, the rum brand is has owned since 2003, to French spirits group La Martiniquaise-Bardinet.

 

In November 2024 it created the Diageo Luxury Company to streamline and refocus on the luxury sector.

 

Diageo owns more than 200 drinks brands, including Johnnie Walker, Baileys, Smirnoff, Captain Morgan, Casamigos and Guinness.

 

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